At a distance, it is hard to tell when a freight train is about to hit a wall. You might hear screeching, whistle blowing or even screams just minutes before. But what about the drunken mortgage lending market? What sounds should we expect to hear as this market speeds toward the proverbial wall? Some believe that the sounds can already be heard in the distance.

Although many market watchers predicted that higher rates and a slowing housing market would bring the furious pace of mortgage lending to a halt, their predictions have not panned out. Higher mortgage rates and a slowing housing market have not yet translated into the significantly higher foreclosures and bank losses that these pundits predicted. But what do rising mortgage delinquency rates foretell? Here is where the plot gets interesting. According to the Mortgage Bankers Association, mortgage delinquency rates rose an eye-popping 7% to 4.7% in the fourth quarter of 2005. Most market experts would agree that this kind of rise in delinquencies, if unchecked, will give lenders a severe case of indigestion.

Despite the higher delinquency rates and other red flags, mortgage lenders are speeding ahead undaunted. They continue to ignore former Fed Chairman Greenspan