A new study says a tidal wave of foreclosures-about 1.1 million- will soon flood the nation.

Christopher Cagan, director of research and analytics for First American CoreLogic, explains that the study focused on 8.4 million adjustable-rate mortgages (ARMs) that were obtained in the period of 2004 to 2006. More than a million of those borrowers will lose their homes to foreclosure in less than a decade.

There are ways to tell if you're the type of borrower who is likely to lose your home. For instance, ARMs are a losing bet right now. Homeowners who got one of these mortgages in 2004, 2005 or 2006 have a one-in-three risk of foreclosure. Those who got a subprime ARM during those years have a lower risk, with only one in eight of those homeowners projected to lose their homes.

Those estimates are optimistic, with Cagan assuming that property values will remain unchanged from their December 2006 levels. If house prices fall instead, as they have been in many markets, the number of foreclosures will be higher.

If a miracle occurs and house prices rise, the number of foreclosures will be a bit less, with a 1% rise or drop in house prices meaning a change plus or minus of 70,000 in foreclosures.

Cagan says his estimates of losses are based solely on changes in ARM rates, and does not include other reasons people go into foreclosure, such as death, divorce, or being laid off from a job. Areas hard-hit by the loss of industry- like Detroit, which has been bleeding automotive-related jobs- will experience high foreclosure rates unrelated to the subprime lending issue.

This is the second year Cagan has put out an estimate of how many foreclosures would result from ARM rates being re-set. A year ago, he forecast that almost $200 billion in foreclosures would result over the next six or seven years, though at the time, he thought this would only trouble borrowers and wouldn't be a problem for the economy as whole.

The worst is yet to come .. Cagan's estimate of 1.1 million foreclosures will not happen right away but will be spread out over the next six or seven years. The worst of it will be felt in 2008 and 2009, he says, because housing prices peaked in 2005 and 2006. Of the two, he expects this year to be the worst. "That is the pileup of 2/28s originated in 2006 at the peak of the market. And also, you have the 3/27s starting in 2005. Those two years are the peak market years, also very generous lending years, so you had the peak of the market, with people borrowing with nothing down or 5% down."

Those who borrowed between 95 and 100 percent of the home's value in 2006 were in trouble right away. They ended up owing more than they could get if they turned right around and sold them home, especially since a chunk of the earnings from the sale would go to the real estate agent's commission.

Let's take a look at Subprime ARMs. Most subprime ARMs start out with an introductory rate that lasts two years and then are adjusted every six or 12 months thereafter for the next 28 years, and are referred to as 2/28s. The subprime mortgages known as 3/27s have an initial rate that lasts three years, and then the rate is adjusted for each of the next 27 years.

Many borrowers get these subprime ARMs expecting they will be able to fix their credit problems and then refinance at a better rate after a few years. However, in the current housing market, many homes have lost value, and those homeowners will find it next to impossible to refinance after the first few years, as they had hoped.

When borrowers who made small or no down payment experience a rise in their monthly house payments at the same time the value of their home drops (or even stays the same), they will be on the fast track to losing their homes to foreclosure. Because subprime borrowers start out with relatively higher introductory rates, they won't notice as much of a difference when their rates rise.

The worst shock is reserved for those who had the lowest initial rates. Borrowers who got introductory loans of less than 4% (many less than 2.5%) may see their monthly house payments double when the rates go up. About 32% of those borrowers will lose their homes, Cagan estimates.

For an in depth results of the study, please go to, http://www.csupomona.edu/~rerc/RERCSC%20Chris%20Cagan%205.30.07.pdf