Now it's official: the Mortgage Bankers Association, a major banking industry interest group, has released a report that confirms what many (myself included) have feared for the past several months.

Four million American homeowners with a mortgage were either delinquent on their payments or in some stage of foreclosure for the quarter ending June 30, 2008. That's nine percent of all homeowners with a mortgage.

What's worse, it's not just subprime loans that are going belly-up. An increasing number of homeowners are being caught short by a combination of resetting loan rates and declining home values. Many people with good credit are suffering because of exotic loan products like option ARMs with negative amortization. In many parts of the country, homeowners cannot sell or refinance, because their loan balances exceed the value of their properties.

This situation will get worse before it gets better: something like 2 million ARMs are going to reset to higher rates in the next 12 months...unless lenders heed their own trade group and step up to the plate.