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If you want to hear some really scary stories, have a talk with a mortgage broker...after he's had a few beers.
First you will hear about "interest-only" loans and how they have been supplanted by "negative amortization" loans. Then you'll hear that a huge number of loan apps are fraudulently written. Many of the brokers in my area haven't written a traditional 30 year loan in more than 5 years.
In the East Bay, it's hard to find a house for under a million. So we have thousands of struggling couples who fudge their debt numbers to get into the 1.2 million dollar house. They have an interest-only loan that will need to be refinanced in 3 years. If the interest rates climb even a little bit they can no longer afford the minimal payments and if the value of the home has dropped, even a little bit, they are upside down and have no option but to walk away.
Foreclosures here are on the upswing and the higher priced properties are losing value. It's the tip of the iceberg.
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My work here is nearly finished.
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