It just keeps getting "better" in subprime land

Another day, another "subprime" mortgage lender reporting dismal loan performance. This time, it's Fieldstone Investment (FICC), a relatively small player in the business. The 30-day delinquency rate in its mortgage investment portfolio ballooned to a whopping 7.2% as of June 30, up from 6.1% just one quarter earlier and 4.7% a year ago. FICC also talked about how the secondary market for high-risk loans, especially high loan-to-value second mortgages, continues to tighten.

You can read more here, if you like. Suffice it to say this is a major, major problem brewing behind the scenes. I followed the mortgage market back in 1998 at Bankrate.com. That's when the Long-Term Capital Management debacle caused the secondary market for mortgages to seize up. Subprime lenders couldn't sell off their loans (especially the 125% LTV seconds that were that period's "hot" mortgage), they didn't have enough cash on hand to survive, and many went belly up.

Even without a LTCM-magnitude debacle, this nascent credit tightening is definitely something to keep an eye on. The housing bubble is already popping ... through in tighter lending requirements resulting from a subprime industry mess and you've got a recipe for even slower sales. Food for thought.