There’s a lot of evidence to suggest that from 2001 on or so, normal underwriting standards came off quicker than bras on Bourbon street during Mardi Gras. Some numbers I recall suggested that as many as 50% of new mortgages originated in recent years were interest-only.

My sense is that an awful lot of this spike in foreclosures might be coming from people who got loans in the past 3-4 years, who simply wouldn’t have qualified in more sober times. If true, what you have are a few thousand people who got to pretend they owned their house for a couple years, and now get to go back to renting, which is what they should have been doing all along.