Ticking time bombs known as "adjustable rate mortgages"

Not much of a surprise that the two states with the highest percentage of the nation’s subprime adjustable rate loans are California and Florida, according to a recent USA Today article. Real Estate Bloggers put the data into a nice top ten list. Buyers used creative financing to pay for homes they otherwise couldn’t afford and speculators used ARMs to buy properties that they hoped to flip for a profit. California loans accounted for more than 17% of the nation’s subprime ARMs and Florida’s mortgages made up more than 12%. No other state was close. Arizona, which is also facing a massive real estate downturn, came in at No. 5 with 4.3%.

To continue reading this article you must be a Bloomberg Professional Service Subscriber.