The press looks at the new subprime report. "A new Center for Responsible Lending (CRL) study reveals that 2.2 million American households will lose their homes and as much as $164 billion due to foreclosures in the subprime mortgage market."

"'In the subprime sector, the most vulnerable borrowers are sold the most dangerous loans,' said Mike Calhoun, CRL president."

"In recent years, high appreciation in many areas has masked problems in the subprime market. CRL projects that the cooling housing market, will cause failure rates to rise sharply in many major markets. California, Arizona, Nevada, and greater Washington, D.C. will be especially hard hit."

"'Foreclosures can be a disaster not only for the family but for the community as well,' said Pat Vredevoogd Combs, president of National Association of Realtors. 'When one home forecloses, the surrounding houses lose value, too.'"

The Denver Post. "Subprime loans, which carry a higher interest rate, are designed for borrowers with impaired credit ratings. Once a niche market, they now account for nearly one of every four mortgages made in the U.S."

"'We all know that some subprime loans are a recipe for disaster if the family can't afford them when the payment goes up,' said Pat Vredevoogd Combs, president of the National Association of Realtors."

"Realtors are concerned that many families don't understand the risks behind their mortgages and that a spike in foreclosures could depress housing markets, Combs said."

"Subprime loans that start out with low teaser payments that adjust rapidly higher after two years, known as 2/28 loans, are especially dangerous. Critics call these loans 'exploding ARMs' because payments can rise 30 percent or more from the payment amount that was used to qualify a borrower."

"Even when home prices nationally were enjoying robust gains, about 13 percent of subprime borrowers lost their homes in foreclosure within five years."

From Business Week. "The obvious question: If you have a lot of equity in your house and you're having trouble making payments on the mortgage, why wouldn't you just sell the house yourself, pay off the loan, and keep the equity?"

"'Yes, they should sell. But most people put that off until the last minute and hold on as long as they can. There are not that many borrowers who are able to make the rational decision to sell and go rent. Most keep refinancing as long as they can,' said CRL's Mike Calhoun."

"Randy and Jennifer Rimstad of Minnetonka, Minn., refinanced their mortgage in 2004 to replace a 50-year-old furnace and pay for their youngest daughter's wedding. In May, their interest rate jumped to 8.55% from 5.55%, pushing their monthly payment from $1,654.81 to $2,295.68, and the Rimstads buckled under an adjustable rate mortgage they say they didn't understand and could ill afford."

"Then came the collection nightmare that tacked on another $700 or so in monthly payments. On Dec. 5, Option One Mortgage Corp., a Kansas City (Mo.)-based unit of H&R Block Inc. foreclosed because the Rimstads owed more than $18,000 in late charges and attorney's fees, on top of their past-due payments."

"Ivy Jackson, a director at the Housing & Urban Development Dept., is bracing for a lot more consumer complaints. 'The speculation is the servicers don't have enough people to handle the volumes. We're hearing that they're not set up to service [exotic] loans.'"

"Paying on time isn't enough to protect customers from some wily servicers. A servicer might even pocket an extra payment and never credit it to a borrower. 'I have audited loans where the consumer has made all payments on a timely basis, and yet the servicing company manufactured a default and, in some cases, completed a foreclosure,' says Marie McDonnell, an Orleans (Mass.)-based mortgage finance analyst."

From Forbes. "The deterioration of homeowners' ability to keep up with mortgage payments will add oomph to calls on Capitol Hill for new regulation of mortgage lenders and brokers."

"'There is considerable discussion to enact a predatory lending law for these mortgage lending problems,' says Keith Ernst, senior policy counsel for the CRL."

The New York Sun. "A phenomenon made its debut in 1998, when the housing market was booming and stated-income loans (those based on what you tell the bank you're earning) became the rage. Given widespread income exaggeration by eager home buyers, such loans soon became known in the real estate industry as the 'liar's loan.'"

"Interestingly, a recent sampling of 100 stated-income loans by an auditing firm in Virginia (based on IRS records) found that 90% of the income statements were exaggerated by 5% or more, while almost 60% of the stated amounts were exaggerated by more than 50%."

"The president of Mortgage Brokers Association for Responsible, Steven Krystofiak, says he believes that of this year's estimated stated-income loans, 'most, if not all, are fraudulent.' He points out that roughly $1 trillion worth of American home mortgages will be reset over the next year (about 11% of the $9 trillion of mortgages outstanding), most at higher rates because of the steep rise in interest rates in recent years. He says, many monthly payments could easily rise 50%."

"In response to this financial burden, Mr. Krystofiak says, untold numbers of homeowners will simply no longer be able to afford their homes. They'll face a double whammy: their mortgage payments will increase and they won't be able to refinance because the value of their homes has declined. What's more, he points out, they won't be able to sell them because they'll owe more money on their homes than they're worth."

"This housing horror show, he predicts, will lead to an explosive rise in delinquencies and foreclosures."

"The latest word from the Mortgage Bankers Association tends to give some credence to Mr. Krystofiak's concerns. About a week ago, it reported late payments and new foreclosures on American homes in the third quarter rose versus the prior quarter, and it predicted further growth as a massive wave of adjustable-rate mortgages reset at higher interest rates."

"The bottom line from our mortgage broker is hardly encouraging: The full brunt of the housing weakness has yet to be seen. If he's right, of course, hopes for a soft landing may be little more than a passing dream."