With 1 out ever 5 homes in our area having a subprime loan, and knowing that all of these subprime loans were meant to be "Band Aid" loans.   Band aid meaning a temporary solution allowing the consumers some time to correct their past credit woes.  Knowing that in 2 or 3 years they will have to refinance, the goal is to have them in a position where they can go "A" paper and refinanced out of their high interest rate subprime loan.   As a lender we also expected that during this 2-3 year period of time, the consumers home as appreciated.  So lower loan to value and better credit should equal a much better rate, Right?  Yes, Right..........  That is where the problem lies, subprime went out on a limb got a bit crazy with 100% financing, with bad credit and stated income, the borrower is now approaching the two year mark and for whatever reason has not worked on improving their credit much, and uh oh values are the same and in some cases down from two years ago.  The consumer is now faced with an adjustment on their loan - to approximately 11% ( based on the 6 month libor + a typical margin of 6%) - payment goes skyrocketing - foreclosure on the horizon - more foreclosures on the market drives our real estate values down further.    I think we as resposbile mortgage lenders, must get to the clients as soon as we can and educate them on what is going down!  They don't make following our business thier business, like we make it our business - ( gee that is a lot of business in one sentence)  Anyways, just wanted to share what was on my mind.