Feb. 2 (Bloomberg) — “Defaults on mortgages to people with poor credit histories or large debt burdens rose in November above their worst levels during the last recession six years ago, according to Friedman Billings Ramsey Group Inc. (Friedman Billings is an investment bank and money manager with a focus on mortgage companies and assets. It also owns First NLC Financial Services LLC, a non-prime mortgage lender.)

The percentage of subprime mortgages packaged into bonds and delinquent by 90 days or more, in foreclosure or already turned into seized properties climbed to 10.09 percent from 9.08 percent in October, analysts led by Michael D. Youngblood at the Arlington, Virginia-based firm said in a report today…..

Fraud by borrowers is also contributing to higher defaults, according to lending executives including Originate Home Loans Inc. Chief Executive Officer James Marino. One type is the use of “straw buyers” who are in collusion with homebuilders or real estate speculators, he said. The buyers don’t intend to pay back their loans after buying a house for more than it’s worth.

At least a third of potential subprime loans that brokers discuss having Marino’s Westmont, Illinois-based lender make appear to involve fraud, he said. He is cutting about half of his 80-person staff to reduce his company’s business of lending through brokers, whom he calls often complicit”

That was for November. The ABX indices have cratered since then. And we haven’t even gotten into recession yet. Poor Goldilocks.