Not even the teaser rates

Here's another sign the subprime meltdown is even worse than the pessimists thought: In much of subprime land, it's not the resets on interest rates that's killing homeowners… They can't even handle the teaser rates:

Borrowers who took out loans in the first six months of 2007 are falling behind on payments faster than homeowners who took out loans last year, according to a report by Friedman, Billings, Ramsey, an investment bank based in Arlington, Va…

The report’s author, Michael D. Youngblood, a portfolio manager and analyst at Friedman, Billings, Ramsey, said that most mortgage companies and banks had not tightened lending standards for borrowers with weak, or subprime, credit until July or August, even though early this year regulators, analysts and mortgage investors knew that the easy lending policies of 2005 and 2006 were producing high default rates.

Mr. Youngblood notes that the poster child for irresponsible lending, Countrywide, didn't tighten its lending standards till August.  Meanwhile, default rates on fixed-rate subprime loans are lower than the adjustable models… but rising at the same breakneck pace.

And the second wave keeps picking up strength.