The loans that got us into this mess were generally the first to fall. Variable rate mortgages written without documentation for people with sketchy credit histories shocked nobody as their slide became an avalanche. But, the good stuff is starting to follow. An increasing amount of fixed rate mortgages offered to borrowers with solid credit histories are feeling their ways to foreclosure. Blame unemployment for this one. When people can't work, it gets pretty hard to pay the mortgage.

Fixed rate, high quality mortgages had a foreclosure a year ago. Last quarter, it jumped to 33%, according to a Mortgage Bankers Association report. As this happened, the amount of homeowners behind on their payments or in foreclosure just set another record high ... for the ninth month in a row. Subprime mortgages are headed in the other direction. Low quality adjustable rate mortgages are now 16% of new foreclosures -- compared to 35% last year. And, more than 18% of Federal Housing Administration loans are anywhere from one payment behind to in foreclosure, with California, Nevada, Arizona and Florida worst off: together, they accounted for 44% of new foreclosures.

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When you're serving your country, there's a good chance you'll move around a few times . . . which can conflict with the traditional American dream of homeownership. Soldiers who bought homes several years ago could be stuck selling now at depressed prices -- and on fairly short notice.

Needless to say, the financial pressure can be profound. A Staff Sergeant with a decade of service behind him, for example, is paid just under $37,000 a year. Even when you add in the health care and other benefits provided by the Department of Defense, it's still hard to handle a serious loss on a home.

The February stimulus plan included provisions to help military personnel in this situation, but little has happened. Soldiers complain that information is hard to find and guidelines aren't available. So far, none of the funds have been disbursed, and the federal government is keeping its collective mouth shut.

Home foreclosure filings in the United States hit a record 1.9 million in the first half of 2009, according to RealtyTrac –-- on more than 1.5 million properties. Again, unemployment is one of the primary culprits, as a lack of income makes it pretty tough to bring a loan at risk of default up to date. The number of filings is up 9% from the second half of 2008 and up almost 15% from the same period last year.

Last month, foreclosure filings were up 5% relative to May and up 33% from June 2008. The month's action was the third highest on record, and it was the fourth month in a row in which there were filings on more than 300,000 properties.

The banks pumped so much money into the housing market (with not so much as a whimper from the government) that it blew up in their faces. The depressed housing market exposed questionable lending practices at every level of the industry, from the solo mortgage broker to the largest of investment banks and their partners in crime, the rating agencies.

Thousands of mortgage brokers are now looking for work, as are the Chief Executive Officers of Citigroup Inc. (NYSE: C)'s Chuck Prince, and Merrill Lynch & Co,, Inc. (NYSE: MER)'s Stanley O'neal. The difference between the two groups, however, is the multi-million dollar severance packages. The ex-CEO's may have seen their reputations damaged but not their bank accounts. I wonder where they bank - offshore perhaps?

The sad housing market is old news by now, although it keeps getting sadder. The real issue now is, how do we put trust back into a banking system that has proven itself so flawed? We have been seeing almost all of the banks write down the value of their holdings on a daily basis. Now what? The banks essentially were crushed by a Frankenstein monster of their own creation. Any stock portfolio that includes financial stocks has been poisoned for the next year at least.

It seems that investors have been yelling "timber!" at Lumber Liquidators (NYSE: LL). Late last week, the company priced its IPO at $11, which was below its $12-$14 range. Since then, the stock has plunged to $9.25.

Lumber Liquidators is a specialty retailer focused on hardwood flooring, offering more than 25 premium brands at everyday low prices. There are 111 stores in 42 states. And, of course, there are other channels, such as a catalog and Internet site.

The formula has worked quite well. From 2004 to 2006, sales have gone from $171.8 million to $332.1 million. Operating income was $21.4 million and same-store sales continue to hum.

It's impressive stuff – especially in light of the slowdown in real estate.

But can the company sustain it?

Well, investors don't think so. If the economy slows down, it seems inevitable that consumers will defer mega projects like flooring.

The underwriters on the deal include Goldman Sachs (NYSE: GS) and Merrill Lynch (NYSE: MER).

You can find the prospectus at the SEC website. Also, if you want to check out more information recent IPO activity, visit DealProfiles.com.

Tom Taulli is the author of various books, including The Complete M&A Handbook and The Edgar Online Guide to Decoding Financial Statements.

People don't want houses like the Hampton that Toll Brothers Inc. (NYSE:TOL) is building at its Chapel Hill at Sparta development in New Jersey.

This 4,780-square foot McMansion has four bedrooms, four bathrooms and three garages. The floor plan base price is $809,975, but given Toll's current state I bet that's negotiable.

The largest luxury home builder today reported quarterly results that were horrendous. Fiscal first quarter earnings plunged to $54.3 million, or 33 cents, a share, from $163.9 million, or 98 cents, a year earlier. Revenue fell 19 percent to $1.09 billion. Analysts were expecting profit of 29 cents on sales of $1.09 billion, according to Thomson Financial.

Toll understandably gave earnings guidance that was wide enough to drive a tractor-trailer through. Profit this fiscal year is expected at $1.46 per share to $1.85 per share with revenue between $4.20 billion and $4.96 billion. Analysts had expected profit of $1.46 on sales of $4.36 billon.

"There are too many soft markets at this stage of the selling season to call a general upturn in the new home market," said Chief Executive Robert Toll.

That's putting it diplomatically.

With a few exceptions, the real estate market is coming back to earth. The crazy good times in the market are over. Now, people are hoping that the bad times don't get worse.

Also check out some other earnings reports that we're following, and let us know what you're expecting.

As we all know last year was a tough year for anyone trying to sell their home. December closed out the year with a 0.8% decline in existing homes sales, making 2006 the largest yearly drop in the last 24 years. All in all the year witnessed sales volume drop by a total of 8.4% confirming what we all already knew... it's just not that easy to make money in housing anymore.

But, as is almost always true, there was a silver lining to the situation. We did see an actual rise in the median price for existing home sales of 1.1%, which is not even close to the 12.4% we saw the previous year, but a rise nonetheless.

Now the question that remains is -- have we seen the worst of things, or are there more troubles awaiting us? I think that we have pretty much seen the majority of the housing pullback. The main reason being the lack of the "buy and flip" investors that helped pushed sales up so sharply during the boom years.

Three or four years ago everyone knew someone getting rich off their properties and were determined to do the same thing for themselves. This resulted in many people picking up that second home, or selling their current property in hopes of flipping it really fast for a quick dollar. Fear has taken over, and no longer are we hearing the fairy tales of people making their fortunes with quick buy and flip housing investments.

The result... a more stable housing market this year.

Michael Fowlkes has worked as a stock trader for seven years and spent the last two years working as an analyst for the online investment advisory service Investor'sObserver.