Of all of the residential mortgage loans existing today, approximately 75% were refinance or purchase loans funded during the "Bubble" years between 2003 and 2007.

The vast majority of these same funded loans (2003 to 2007) were highly leveraged refinance loans which typically provided the property owner with cash out via a 1st mortgage only, a stand alone 2nd mortgage or line of credit, or a combination of a concurrent 1st and 2nd mortgage.

There were approximately 500% more cash out refinance loans than new purchase loans (a 5 to 1 ratio) during this same "Bubble" year time period as well. In many cases, property owners used the cash to pay off consumer (i.e. credit cards), business, and school loans, or to use the cash to pay daily expenses or invest the money elsewhere.

During the same "Bubble" years ('03 to '07), there were an estimated 43 million residential mortgages funded. According to a recent Mortgage Banker's Association report, approximately 8.2 million of these 43 million existing residential mortgage loans (approximately 14.41%) were in some form of default, delinquency, or foreclosure status nationwide.

As property values have declined anywhere from 20% to 50% plus in various areas nationwide since the peak "Bubble" years, then many of these same properties funded have little, no, or negative equity right now. The hardest hit states in terms of value decline are the following "Bubble" states (those states that appreciated the most in the same "Bubble" years): 1.) California, 2.) Florida, 3.) Nevada, and 4.) Arizona.

Borrowers who currently are "upside down" in their homes (debt exceeds value) are more likely to walk away from their homes even if they can afford the monthly mortgage payments. As a result, we may sadly continue to see a much larger wave of mortgage defaults in 2010.

We will continue to keep our clients informed though about the best investment opportunities as the Credit Crisis continues onward.