The first wave of foreclosures involved subprime adjustable rate mortgage (ARM) loans made during the 2003-2007 boom triggered when the rates and payments were adjusted.

The second wave to come will be triggered by the same type of adjustments on Alt-A and Option-ARM loans.

With unemployment numbers rising along with the ARM rates, the areas along the Interstate 15 corridor, from Escondido to Barstow, will suffer the most. However, the foreclosures won’t be the worst of it as upside-down loans are converted into negative-equity banks due to those foreclosures, and that in turn will mean a tight leash on new commercial loans. The lack of available commercial loans will hurt local businesses, the very businesses laying off workers right now. It’s a vicious cycle.

first tuesday take: It’s like déjà vu, circa 1983 and 1993. Apparently, we never learn.

Re: “Crush of Foreclosures coming to Southwest County” from The North County Times