While I definitely agree most of the bleeding right now is confined to the sub-prime market, it appears that the pain is starting to spread into the Alt.A market as well.

I live in Fallbrook, and the majority of homes here are older. There are some newer developments but, by and large, the homes here have been here for a while.

The interesting thing to note is this: The people getting hit locally with NOD/NOT/foreclosure notices are upper income, white collar professionals. My information is anecdotal, but this is a small community and people talk.

While Temecula/Murrieta (north of us) have been widely pilloried as a bad example of what happens when over building and easy money collide, it appears more gentrified areas like Fallbrook, Vista and Bonsall are not immune either.

Unlike others, I am not forecasting a housing collapse, but I do think the correction is going to be ugly and I think we are nowhere near bottom yet.

It also appears that the news coming out of Wall Street supports the assertion that the major issues surrounding the sub-prime debacle are beginning to spread into the Alt.A and prime markets as well. Lehman Bros pulled a $1B warehouse lending line from HR Block’s mortgage lending unit, pension funds are admitting their exposure to undervalued mortgage backed securities and UBS fired their CEO (as a direct result of their exposure in the mortgage market).