For a long time now, the reigning truism about housing market troubles has been that once the subprime defaults worked their way out of the system, we would have only the Alt-A loans--not-quite-prime loans obtained at higher interest rates in exchange for little or no documentation of borrowers' income, aka "liar loans"--to worry about. And since there were fewer of them and a lower expected default rate, the thinking went, there were grounds for believing that the worst of the housing bust was behind us.

This was a cheerleaders' forecast through and through; it summarily ignored the main factor in reducing foreclosures and spurring a housing turnaround: employment. Glenn Dorfman, the former head lobbyist for the Minnesota Association of Realtors, said as much to me months ago. And now there are numbers to prove him right.

As Peter Goodman and Jack Healy wrote in the New York Times over the weekend, the next wave of foreclosures is upon us, and it has little to do with Alt-A's and almost everything to do with jobs:

Economy.com expects that 60 percent of the mortgage defaults this year will be set off primarily by unemployment, up from 29 percent last year.

From November to February, the number of prime mortgages that were delinquent at least 90 days, were in foreclosure or had deteriorated to the point that the lender took possession of the home increased more than 473,000, exceeding 1.5 million, according to a New York Times analysis of data provided by First American CoreLogic, a real estate research group. Those loans totaled more than $224 billion.

During the same period, subprime mortgages in those three categories increased by fewer than 14,000, reaching 1.65 million. The number of similarly troubled Alt-A loans — those given to people with slightly tainted credit — rose 159,000, to 836,000.

They also report that here in Minnesota, according to the Minnesota Home Ownership Center--a nonprofit counseling center launched in 1993 by a consortium of banks--three out of five people seeking foreclosure help at this point have prime mortgages.

Small wonder, then, that the new Case-Shiller housing numbers released this morning are tracking the worst-case scenario from the federal stress tests for big banks--the one that has unemployment passing 10 percent by early next year, as it indeed seems poised to do. Calculated Risk has the details in a pair of graphs.