This week we get what promises to be another round of mystifying data out of the Mortgage Bankers Association.

Several months after the end of every quarter, the MBA releases its latest statistics on home defaults and foreclosures.

In a word, every last report in recent memory has been downright encouraging. Therein lies the confusion.

The Federal Reserve is anguishing over the deterioration in lending standards, and with good reason. Some of the mortgages being written today make the high-octane junk written just before the savings and loan crisis look as harmless as a newborn 30-year fixed-rate loan.

Down payments are passé. Principal payments can be forgone for 15 years. Heck, even payments are optional.

Household debt has never before even flirted with its current record levels. Moreover, it's been growing at a faster pace than household assets, which also have been skyrocketing thanks to the speculative frenzy juicing home prices.

High expenses

That's just half the mystery.

Owning a home has never been as expensive as it is today. Property taxes, utilities, any kind of home service, maintenance, wildly long commutes to wherever you work from the developing hinterlands — they've never been as costly to the average Joe and Josephine.

Paul Kasriel, chief economist at the Northern Trust Co., notes that households' required principal and interest payments are at a record 13.4 percent of after-tax income, despite interest rates being at 40-year lows.

But housing is still surging.

Part of the explanation is that households are buying and selling homes like Internet stocks in 1999. In July, the latest available data, the dollar volume of single-family home sales hit $1.7 trillion.

That amounts to 16 percent of nominal personal income — and it doesn't include condos.

His prediction: "Households are unlikely to be able to continue their borrow-and-spend activities to the degree they have."

Maybe, maybe not.

Mortgage addiction

As long as banks keep on loosening their standards, it's conceivable that households' habits will worsen, not improve.

Why would banks do this?

Because their livelihoods depend on the addicts remaining addicted. A record 61 percent of bank credit is mortgage-related.

I guess the MBA data had better remain encouraging. If defaults even start to tick up, the banking system would be "crippled," Mr. Kasriel writes.

And just in case you can't picture "crippled," Mr. Kasriel suggests you look at 1990s Japan. The crippled banking system there killed the economy.

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