Subprime mortgage defaults peaked and will slowly begin to slide during the next two years.

But don't get excited -- option ARMs and ALT-A mortgages are now beginning to rise at a very rapid rate. According to analysts I follow, notably Ivy Zelman, the next tsunami will be larger than the one we just went through.

And the banks are not currently valuing these mortgages as if they will default at this rate.

Be sure to read all 7 reasons the stock market isn't going up any time soon.

Michael Shulman is a contributor to OptionsZone.com.

I'm not a huge fan of Suze Orman, but the one thing that I appreciate about her approach is that she brings basic financial topics and common sense to the everyday U.S. citizen who knows little to nothing about how to best conduct their financial lives. It's a shame that financial education is not taught in most public high schools these days along with history and arithmetic, because that sets many kids up for financial failure later in life. But I digress.

While Orman can help make you more financially savvy, there is a contingent of the population that is not heeding her advice -- or any advice, for that matter. Specifically, I'm talking about overextending yourself to attain that McMansion (and everything else you can get with a huge HELOC). Once your finance company starts adding to that cheap mortgage payment -- and it will -- you can find yourself way over your head.

You know what I'm talking about -- "adjustable" ARMs and interest-only mortgages. Why on earth do folks buy these? Put simply, to have the material possessions that present the appearance of financial success -- but are based on just the opposite and a lack common financial knowledge. For a while, the facade works. But when that interest rate goes up or those principal additions kick in, the hurt really starts.

Are massive foreclosures on the near horizon? If I had a Magic 8-Ball, it would read "all signs point to yes!" There is already a glut of housing in many areas of the U.S. and adding even more homes for sale from foreclosures will be disaster for certain areas -- and the realtors that serve them most likely. HUD signs may be more commonplace soon, and subprime home loans and even normal loans will go into in default in what some predict as being in record numbers.