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

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.

[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.