The big numbers are big, no question. A full nine percent of all loans in this country are either delinquent or in some state of foreclosure. That’s a big number.

But when you look deeper into the number,released today from the Mortgage Bankers Association, you see that really two states are to blame and only eight states had rates of foreclosure starts that were above the national average.

California and Florida continue to be the crux of the foreclosure crisis. They were the centers of real estate speculation during the latest housing boom, and now they are consequently paying the price. California and Florida alone accounted for 39 percent of all of the foreclosures started in the country during the second quarter and 73 percent of the increase in foreclosures between the first and second quarters. So if it’s just those two states, why should we care?

“You can’t separate them, and they’re certainly continuing to impact the earnings of companies like Fannie Mae, Freddie Mac,” says the MBA’s chief economist Jay Brinkmann. “Some of the larger banks that have a large presence in California and Florida. So from that sense of an impact on the financial institutions, certainly you cannot discount them,” he adds in an interview with CNBC.

The fact is that Fannie

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[FNM  Loading...      ()   ]and Freddie

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[FRE  Loading...      ()   ] have put in additional fees to cover some of the losses they’ve incurred from loans in these states. Those fees apply everywhere, not just in California and Florida. Suffice it to say, we’re all paying for the boom states’ indiscretions.

“There is a, a contagion effect in that sense, a credit tightening across the markets, people pulling out wholesale from making certain types of loans,” says Brinkmann.

(Video: Foreclosures are not getting any better.)

On the bright side, a little-reported factoid is that FHA loans are faring very well, better in fact than in the last few years, with delinquencies on these loans actually falling.

With Fannie and Freddie cutting back, more and more folks are heading for the FHA loans, despite the added premiums. So FHA is getting more really solid loans, despite the fact that FHA was created to offer loans to borrowers with riskier credit. These are strange days.

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