Buried on page two of the Money and Investing section of the WSJ is a very interesting article that highlights one of the few reasons why I believe a true recovery in the US economy is far off. Option ARM (or "pick-a-pay") default rates are now surpassing those of subprime.

Ambac, one of the top bond insurers in the country continued to hemorrhage cash on bad mortgage-related bets. Ambac reported a loss of $228 million in CDOs and its investment portfolio in April. Many of the CDOs include subprime mortgage debt.

Citigroup, which posted another whopping $12 billion in mortgage-related write downs, still has exposure to $60 billion in subprime-related loan bets and will likely need to raise additional capital.

I recently got a chance to read a very interesting book that tells the full story about subprime and the crazy days of the last real estate boom. The name of the book is “Greed, Fraud & Ignorance: A Subprime Insider's Look at the Mortgage Collapse” by Richard Bitner, a 14-year veteran of the mortgage industry.

Using a little understood technique of moving your money to its most advantageous position, you could cut 10 or even 20 years off your 30-year fixed home mortgage.

The Federal Bureau of Investigation on Tuesday said it is investigating 14 companies for possible fraud or insider trading violations in connection with loans made to risky borrowers, and investments spun off of those loans.

In an old-fashioned pyramid scheme, the alluring premise is that you'll get back far more than you invest, a exponential return. The reason it is a "scheme" rather than a sustainable business model is that it is impossible for everyone who joins the pyramid to achieve the same returns.

Prosecutors in New York and Connecticut have opened a probe to see if the Wall Street banks have held back critical information on subprime loans and have failed to disclose sufficient data on mortgage lending practices.

Typically, subprime loans are for persons with blemished or limited credit histories. The loans carry a higher rate of interest than prime loans to compensate for increased credit risk.

I have always said that it is very deceiving to say that the mortgage crisis is all about subprime loans. During the housing bubble, prime borrowers got just as greedy as subprime buyers and got themselves in loans they didn’t understand and/or couldn’t afford.

Real estate house prices in the US continue their downward plunge. And since prices are falling, more homeowners find their equity gone and are therefore trying to sell their houses, too, resulting in still more declines.

It has been another dismal week in the United States as the multi-billion-dollar losses from the subprime crisis deepen. Investment Bank Bear Stearn reveals more losses.