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%.
Oddly, Nevada, which has the nation’s highest foreclosure rate, didn’t even crack the top 10. Only about 2% of the subprime ARMs originate in Nevada. My guess is that it might have something to do with the state’s population, which is about 2.5 million compared to, say, California, which has about 37 million people.