This is a rush transcript from "On the Record," August 11, 2009. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: This brings new meaning to the term "drowning in debt."

Now, according to a new report, by 2011 48 percent of U.S. home mortgages could be underwater. That means the owners will owe more money than their house is worth. How is that possible?

Joining us is Bill Burnett, president of Virginia's Association of Mortgage Brokers. And Bill, just as a starter, the good news I read this morning experts is that experts think the recession is over, and then I hear what you have to present.

BILL BURNETT, PRESIDENT, VIRGINIA'S ASSOCIATION OF MORTGAGE BROKERS: No. It's far from over. I mean, we've got a situation where we have specifically in 2005 where the subprime mortgages came out, and you had three term varieties, a two year ARM, a three year ARM, and five year adjustable rate mortgage.

And what has happened is we have gone through the two years. They matured and adjusted in 2007. In 2008 we hit the three years, and that's what we are going through right now. The foreclosures are astronomic, and the loan modification program is abysmal, so it's really not helping anything.

Now, as we all know, the unemployment is contributing towards more possible foreclosures as well, and the big news that I haven't heard out on the street yet is the awaiting 2010, which is the five year arms that were presented in 2005, they are going to be adjusting in 2010.

VAN SUSTEREN: And so when they start the adjustment in 2010, what happens?

BURNETT: Well, depending on what type of loan they have got. They could be in a traditional adjustable rate mortgage where they look at the index plus a margin which is fancy bank terms. But typically right now you may find some people actually going down a slight bit.

VAN SUSTEREN: That's good. They are not going to go in foreclosure. It's the ones that go up.

BURNETT: Correct.

VAN SUSTEREN: And so what's the risk factor of that? I mean, are there a lot of people in that category, because if there are going to be a lot of foreclosures that could certainly take the wind out of our sales in getting out of this recession.

BURNETT: The answer is yes, there is a lot of people, because the most prominent loan at the time was an option ARM. And that was set up so that people actually paid less than the interest that was due on the loan.

And the difference between the interest only payment and the amount they paid went on to the loan balance. So the balances actually went up, all right. Now we had loss of value. So those people are way underwater, and they're going to be in trouble.

VAN SUSTEREN: What are the numbers? Are the numbers commensurate with the numbers for the two year and three year so that we will have the same magnitude?

BURNETT: Actually, no. They are higher, much higher. I think the predictions right now are 77 percent of all the people that had option ARMs are going to be upside down and in trouble.

VAN SUSTEREN: And of course, if you fold into the unemployment problems, it's going to amplify the problem.

BURNETT: Absolutely. Absolutely.

VAN SUSTEREN: What are we doing? That sounds grim. What should would he be doing, and fast?

BURNETT: Well, there is really not a whole lot you can do. Hold on right now.

The one resort that most people are trying to get through right now are loan modifications. That's the immediate help.

Again, I've got clients that have been in those for six months, and they're still not resolved yet.

VAN SUSTEREN: So it is indeed a mess. Well, if we are at least aware of it, we can try to do something or our government can try to do something. Somebody can try to do something so we don't go through this hell again into 2010 and 2011.

Bill, thank you.

BURNETT: Thanks, Greta.

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