Adjustable-rate mortgages were common for overleveraged buyers, but they're not always the prime culprit behind foreclosuresIt's no coincidence that states with the largest shares of adjustable-rate mortgages—Nevada, California, Arizona, Florida, and Colorado—are also among the states with the highest levels of foreclosures. The link between ARM concentrations and foreclosures has become increasingly apparent in the year or so since the subprime loans that originated at the top of the market started resetting. But just because a state has a low exposure to ARMs doesn't mean it is immune to high foreclosure rates.
Take Texas, for example. Home prices in the Lone Star State are low and, as of November, 2007, only about 12% of mortgages were ARMs. But it ranked 14th in the nation for foreclosures, with a rate of one filing per 778 households.
"Like a Used-Car Lot"
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