Some experts fear that a second home mortgage crisis may be on the real estate horizon.

It all has to do with grace periods -- and when time is up.

According to the New York Times, "Prime and alt-A borrowers typically had a five- or seven-year grace period before payments toward principal were required. By contrast, subprime loans had a two-to-three-year introductory period. That difference partly explains the lag in delinquencies between the two types of loans, said David Watts, an analyst with CreditSights."

All this means that we could see a jump in foreclosure numbers as these new grace periods end and a whole second wave of homeowners find themselves in mortgage trouble.

Realtytrac, the leading online marketplace for foreclosure properties, reported that in just the 2nd quarter of this year, foreclosures were up 14 percent. Nevada, California, and Arizona are topping those lists.

James J. Saccacio, chief executive officer of RealtyTrac, reported that for normalcy to come back, the market will need to see a cleansing of the problem loans.

Published: August 5, 2008

Use of this article without permission is a violation of federal copyright laws.