While Midwestern cities, including Cleveland and Detroit, were the hardest hit areas last year in terms of foreclosures, it seems the trend has now moved on to other areas. The booming city of Las Vegas is now considered to be at the epicenter of the foreclosure crisis in America, a shift that began at the end of 2007.

According to statistics compiled by CNNMoney.com and RealtyTrac, seven of the top 100 worst-hit zip codes from December 2007 were in Sin City. Subprime mortgage loans were particularly prevalent in Las Vegas, and typically default at far higher rates than traditional, fixed-rate mortgages.

The hardest hit zip code was 89031 in North Las Vegas, with a total of 741 filings in December. These filings include default notices, auction notices, and bank repossessions. Second worst on the list was the zip code 89131, with 665 filings.

What's different about the foreclosure crisis in the Midwestern cities and those in Las Vegas is that, for example, the 89131 area is prosperous, with strong employment and income levels above the state average. In Cleveland, that's just not the case at all. In Las Vegas, the problems with foreclosures stem from the unafforable terms of the mortgages themselves, not the local economic conditions.

It's the loans themselves that are causing the impact, with adjustable rate mortages, and hybrids having huge impacts. These types of loans feature low introductory fixed rates that reset to much higher ones (usually two years later), and adjust every six months or so after that. So what might have been affordable at first, might suddenly jump and become completely unaffordable.

Another issue contributing to the problem in Las Vegas was a high run-up in home prices. In just the year 2004, the median single-family home price grew by 47%, and then another 14% in 2005. By 2006, the median home cost $317,400, which is almost 50% higher than the national average.

Because of the cost of the homes, this enticed many Vegas buyers to take advantage of adjustable rate mortgages to get the houses they want. Many planed to use the ARM loan to get a foot in the door, establish a good payment record, and then in a couple of years refinance into an affordable fixed-rate loan. Clearly, that didn't work out for many buyers in this market, who found their loans too much of a burden too soon.

Now, Las Vegas home prices are on the decline. The latest surveys show a 7.1% 12-month decline in Vegas prices through September 30. And since then, the price drops have only accelerated further.

Most of delinquency filings in Vegas are for payments 90 days or less late, which is an early and less serious stage in the foreclosure process. Contrast that to Detroit, where they've not only experienced many foreclosures, but now lead the country in bank repossessions. Detroit's zip code 48228 had 145 homes taken back by the banks in December alone.

Similarly, Vegas's zip code of 89031 had 88 homes repossessed by banks. And although they appear to be better off at the moment, those numbers could also soon start to spike.

Another part of the country, the Sun Belt, is also soon to see the foreclosure storm headed their way. According to statistics from Credit Suisse, there is a massive wave of hybrid adjustable rate mortgages due for resets this spring, with more than $45 billion due in May alone. Many borrowers will not be able to manage the exploding payments.