Almost two years ago in The Housing Bubble, I warned that the then-current home building boom was unsustainable and that soon we would begin to see record numbers of defaults and foreclosures. I said then that I hoped I was wrong. I wasn’t.

Last Tuesday, the Mortgage Bankers Association released their Latest MBA National Delinquency Survey (for the end of 2006) and issued a press release that summarizes the report. According to the report:

• The delinquency rate for all home mortage loans was 4.59 percent. This represents an increase in deliquencies for all loan types, but particularly for subprime and FHA loans.
• The percentage of loans in the foreclosure process was 1.19 percent of all loans outstanding. This, too, is a significant increase over the 2005 numbers.
• The foreclosure rate for subprime loans was 4.53 percent, up from 3.86 percent a year before.

Things are getting bad. Mississippi has an overall delinquency rate of 10.64 percent. Louisiana 9.1 percent, and Michigan 7.87 percent. Foreclosures in Ohio are at 3.83 percent. In Illinois, 6.22 percent of all subprime loans were in foreclosure at the end of 2006 (source). It’s almost certain that the numbers are much worse now, almost three months later.

The not surprising part of this whole mess is, now that the things many analysts had predicted and warned about two and three years ago are coming to pass, people are starting to look for somebody to blame. It couldn’t be their own dang fault for taking on the risk of getting a subprime loan. Of course not. It’s predatory lending practices or the government’s fault:

The Administration and Congress helped create the sub-prime crisis by ignoring warning signs and, as a result, they bear some responsibility for assisting the families facing payment shock and foreclosure…

This Administration and the previous Congress allowed the horse not only to gallop out of the barn but jump over the cliff as well…

We call on this Administration and this Congress to take the reins back by immediately allowing FHA to play a role in helping borrowers and passing legislation to protect not only borrowers but also the nation’s overall economy.

The denial is almost over, and the anger has begun. It’s time to find a scapegoat. I said two years ago that this was going to be worse than the fallout from the late 1980s S&L crisis. It’s going to be much worse than I ever imagined.