The truth is slowly coming out. When the bubble was raging across the land, everyone thought that it was speculators and flippers who were driving prices up. Now, we are learning that it was something else. True, the flippers and speculators were there, but they could only continue because there were mortgage lenders out there, ready to push the loand that financed the madness. These jokers were pushing mortgages on ill-prepared and naive borrowers like doomsday was almost upon us.

And just how mad did it get? Well, lending standards were so lax that people could get mortgages with monthly payments higher than their monthly income. Presumably, the idea was that the unfortunate borrower could eat into their savings to finance the monthly payments, then sell up and pocket the equity. There was only thing that this scheme required - eternally rising prices. In turn, that required continued lax lending standards.

The Washington Post has an interesting example how the scheme worked:

"Nahid Azimi, who immigrated to the United States from Afghanistan 22 years ago, recently stood in the upstairs hallway of her home in Loudoun County, silently sobbing as she removed the last of her personal items from the $410,000 townhouse in South Riding she bought with pride last summer. She said she was persuaded to buy the house by an Afghan real estate agent she considered a friend and by an Afghan mortgage broker who promised to get her a good loan.

Instead, Azimi, a cashier at Giant who makes $2,400 a month, found herself strapped into a no-down-payment loan with payments of $3,800 a month. She knew it would be impossible to make the payments, but the mortgage broker promised to refinance her loan to make it more affordable. Azimi couldn't qualify for the refinance, however, so she got a second job to try to cover the costs, borrowed money from her friends and tried unsuccessfully to sell the house. Then one day in November, she collapsed at work, in part because of the stress.

"I can't do it anymore," said Azimi, 44, a U.S. citizen. "I cannot afford it, and I don't want them to come one day and put my stuff on the street."

Currently, around 13 percent of sub prime mortgages are experiencing some kind of payments delay. Within a few months, those delinquencies will turn into foreclosures, which will quickly add to housing supply. Not that teh market is short of unsold houses. In most cities, housing inventory is at record highs.

This crash is slow; it is taking its time; but it is getting there. Two things will get us there. Foreclosures, and tighter lending standards.