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Subprime and Alt-A segments (estimated at 40+% of the mortgage marketplace) have been hit with a neutron bomb. The effects have not been felt in the housing market (sales and pricing), yet.

A few weeks ago, analysts questioned whether subprime problems would transfer into Alt-A. Early reports suggest it is, and now we have to consider the likelihood of problems flowing into prime. If it does, the housing market is toast. Consider potential fallout on the economy, and then things start getting serious.

At this point, I see 2007 being worse than 2006, and potentially, much worse if the lending market does not regain its feet soon.