Mortgage defaults to peak next summer

The default number is expected to hit 3.6 percent of mortgage debt by then.

Of those mortgages, about $460 billion will end up in default before the end of 2008. Of that amount, $113 billion will not be recovered, Moody’s Economy.com calculates.

About 2.5 million first mortgage loans are expected to default over the next two years, with credit problems rising sharply in California's Central Valley, Florida, and the metropolitan areas of Las Vegas, Phoenix, Washington, and New York, according to the study.

This tracks closely with the expected peak in resets for adjustable rate mortgages.