People who calculated what they could afford when rates were 5.25 percent have realized their mortgage payments are going to be a lot higher now that rates have gone up, so they're going for interest-only loans.

I have seen debt ratios as high as 70 percent or 80 percent. But somehow these people have found a way to pay their housing debt and keep their credit score high.

There seems to be a sense of urgency, especially among first-time buyers. We're seeing people in their 20s and 30s who have the 'I need to buy a home now' attitude.

The attractiveness of this product is flexibility, but that flexibility sometimes can get people in trouble.

[Few people will argue that consumers haven't benefited from these changes.] Keep in mind that 20 years ago you couldn't buy a house unless you had a 20 percent down payment, ... You had three choices of loans, adjustable, 15-year or 30-year.

[Equity might have been the only thing preventing foreclosure a decade ago, said Hsieh, but these days most borrowers understand the importance of maintaining their credit score.] Studies show that if you're a credit worthy borrower, you will do everything in your power to keep your credit high, ... That in itself is skin in the game.