So now, those introductory rates on 3/1 ARMs taken out in 2003 are resetting, and homeowners who gobbled up the tantalizingly low interest rates back then are watching in horror as their interest rates, and, correspondingly, their monthly mortgage payments skyrocket.

"If you took out a 3/1 ARM, and it reset this year, you are looking at a 20 to 50 percent increase in your loan," Sharga says. "And that is on a pretty typical loan. With a more exotic loan, it could be higher."

For example, if you took out a $200,000 loan three years ago through a 30-year 3/1 ARM with a 2 percent teaser rate, and that loan reset to 6 percent this year, your payment would jump 42 percent, from $843 per month to $1,200 per month.

"It didn't look like it would be that bad on paper," Sharga says. "When you just look at the interest rate and see it going from a teaser to 6 percent, it looked manageable. But what so many people didn't seem to realize is what it would do to their monthly payment."

Even in the best scenarios, a 50 percent jump in the mortgage bill would be tough to swallow. But some homeowners flocked to ARMs and other more exotic loans as a way to buy larger houses than they might otherwise afford, and are now finding themselves in an especially precarious place.

Many buyers bought extremely expensive homes with these loans with the idea that if the market continued to appreciate, then when the ARM reset, they could refinance the loan at a longer term with a lower fixed rate.

"Everyone's first reaction when they get hit with a price jump after their ARM resets is to either refinance or sell," Sharga says. "But if housing prices have fallen, you might not be able to refinance at the original loan value. And if the house can't appraise for the original loan value, selling won't do much good, either."

With nowhere to turn to get out of the newly expensive loan, many homeowners are now facing potential foreclosure.

And while the timing of the ARMs and mortgage rates are combining to cause serious trouble in the housing market, other high-risk loans are also getting homeowners in depressed markets in trouble.

Lereah says some loans, such as interest-only mortgages or negative-amortization mortgages are also running into trouble now that home values have fallen off their highs.

"When you use those types of loans, a falling market is trouble," Lereah says.

Sharga says he is frustrated as he watches the spike in foreclosures.

"The vexing part is to see property owners say, 'I didn't see this coming.' But every document that they signed when they took out the loan had a page explaining this would happen," he says.

Aside from the national mortgage rate problems, Sharga says some individual markets are also suffering some specific trouble.

"The rest is local. What drives foreclosures in Greeley, Colo., has nothing to do with what drives foreclosures in Las Vegas," he says.

Sharga says Colorado in particular is suffering through some growing pains from aggressive mortgage lending and a high-flying housing market.

"Colorado was the least regulated mortgage market until very recently," he says. "They were writing some very risky loans. On top of that, homebuilders found they couldn't move the new homes they just built, and they started discounting them, which had a domino effect of falling prices."