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MADISON, Wis. – Nationwide, mortgage lenders are bracing for what some experts have predicted will be a sharp increase in foreclosures as adjustable rate mortgages that were very popular during the last refinance boom, reset. Credit unions won’t be immune to this trend, but if industry mortgage experts’ assessments are correct, CUs will be less exposed to credit risk interestingly not so much because of what they have done, but for what they haven’t done.

Already there are signs of what’s in store for the mortgage market: On the West Coast in just the first quarter of 2006, foreclosure activity in California increased an annual 33.6% to 28,550 incidents, according to Sacramento, Calif.-based Foreclosures.com. In addition, notices of defaults, one of three foreclosure indicators tracked and the first step in the foreclosure process, increased 36.5%; and the number of real estate-owned properties, the final step in the foreclosure process and an indication that there’s a new owner, increased 27%.

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