"Sub-prime mortgages are simply home loans made to lower- and moderate-income homebuyers, usually who have more risk. And usually what they have done -- those kind of homebuyers -- is they have taken out in the past adjustable rate mortgages because they could qualify at the lower rate," explains Dr. Walden, a North Carolina Cooperative Extension specialist.

"The problem is that those rates of course can adjust upward. And in fact, they have been doing so because of interest hikes over the last couple of years. So right now, this year we have about $260 billion worth of loans -- sub-prime mortgage loans -- that are going to adjust upward. That is, they are going to become more expensive for those homeowners to carry," Walden adds. "And a significant percentage of those homeowners already have not been able to do that. That is, they have foreclosed, and probably even more are going to do that in the future.

"So this is the problem, and it is really a problem related to the fact that folks got in on the mortgage market at very low rates, they just got in by the skin of their teeth, and then when those rates went up, as they are now, they cannot afford to carry the loan, and so we have bankruptcies and defaults. And we are probably going to see this continue for at least a couple of years."