There is an interesting post by Steven Malanga over at Real Clear Markets that posits that the underlying mechanics of the current foreclosure rate are misunderstood or misrepresented and that the root cause is under capitalized speculative investment.
There are many clues about what has actually been going on that don’t make their way into the media’s stories. One compelling piece of evidence is the sharp divergence in the performance of fixed-rate vs. adjustable-rate prime mortgages. As Liebowitz observes, what we are currently seeing is often characterized as a subprime crisis, but in fact, it is an adjustable-rate mortgage problem. Starting in mid-2006, foreclosures jumped sharply for both prime and subprime ARMs, but not for fixed-rate mortgages of any kind, including subprime ones.