The Washington Post has a really interesting article about a housing counselor in the D.C. area who saw the subprime meltdown first hand.
Coppedge saw it coming in slow motion. Around this time last year, she was mostly dealing with renters who were behind on payments. Rarely did she counsel at-risk homeowners. When she did, they were usually suffering a one-time setback such as job loss.

"Then in midsummer, we felt the tide turning," Coppedge said. "People started trickling in. First they came in to express concern about their loans and gathered information. Then by September, everything picked up speed and suddenly people were telling us they were behind on their mortgages."

Many of those people had taken out adjustable-rate loans. Some used them to buy homes they otherwise could not afford when prices soared in 2005 and 2006. Others were constantly refinancing to pull cash out of their homes.

These loans were usually subprime mortgages, typically made to people with blemished credit. But they were in no way limited to low-income borrowers, said Coppedge, whose recent clients typically earn $60,000 to $110,000 a year.

"People from all walks are getting hit by this," Coppedge said. Meanwhile, the word over at the Credit Slips blog is that the Bush mortgage rate freeze will H&R Block has decided to admit defeat after a plan to sell its troubled subprime lending operation to Cerberus Capital Management LP finally unraveled.

From Bloomberg:
H&R Block will try to sell the portion of Option One that does billing and collections, the Kansas City, Missouri-based company said today in a statement. The decision may result in $200 million in pretax charges.

Chairman Richard Breeden is trying to salvage part of the sale of Option One begun by his predecessor Mark Ernst, who once predicted the entire company would fetch $1.3 billion. Ernst lost his job after markets for subprime mortgages collapsed, leading to more than $1 billion of losses at Option One. Breeden, who won a proxy fight to get on the board, had urged Ernst to ``stop the bleeding.'' H&R Block's subprime lending operation, Option One, was one of the first to go south, losing ABC News has an interview with Treasury Secretary Henry Paulson in which he says that the administration's plan to help subprime borrowers is nearing completion.

The plan is "industry sponsored" and would offer rate freezes to those homeowners who have the "capability" to own a home, but will lose theirs when the rates reset.

"If there was ever a role for government, it's to help facilitate a solution when innovation has outrun the private sector's ability to deal with it," said Paulson. "And there's been a lot of innovation and complexity in the mortgage market, and we need to do everything we can to help get the industry ready to meet the growing number of resets that are going to be coming in the subprime mortgage market." By innovation does he actually mean "corruption" or "incompetence?" We're not sure. Anyway:
The plan would establish guidelines for lenders to freeze payments for homeowners who qualify for the program. Paulson said the program would be completely voluntary, and only some borrowers would qualify.

He said homeowners who can handle an increase in payments and those who don't "have the financial capability to own a home" will not be offered an interest-rate "freeze."

"We're focused on those in the center -- the middle group -- that are going to have a problem meeting their payment, but it's in the industry's interest to come up with a solution to help them stay in their homes."

EXCLUSIVE: Treasury Secretary Paulson 'Optimistic' Mortgage Plan Will Be Finished Soon [ABCNEws]

The Long Johns Explain The Subprime Meltdown [Videos]

John Bird and John Fortune are British satirists who, as The Long Johns, explain in eminently practical terms exactly how the subprime meltdown came to be.

Warning: the characters are intentionally portrayed as casually racist "rich white banker" types, so if you're offended by politically incorrect satire, before you start a comment war you might want to head over to the YouTube page and read what's already been written there, as it's pretty much all been covered.

Oh, and a second note, from a Metafilter reader who takes issue with the whole concept of tracing the meltdown back to loans made to the poor, whether black or white:And to get even more nitpicky, one can also say that it's wrong to keep blaming the whole mortgage/credit crisis on dodgy subprime mortgage lending, period. In other words, it's not just the racial overtones of who they were fingering as an obviously bad credit risk, it's the class overtones too, and both are equally wrong assumptions to make. "Subprime" has been overused and misused as a term to make the rich and supposedly-middle-class feel snooty and superior to "those" kinds of people, whose loans have caused the trouble, when really many of those "rich" people may have high incomes, but are also highly in debt (credit cards, cars) and using equally shady mortgage products to "own" their McMansions and to keep their posh lifestyles going. It's just that their motgage products don't always get lumped in as subprime, but rather get broken out into Option ARM's or even just regular old ARM's, not to mention their HELOCS (home equity lines of credit) which use their (perceived) home values as a piggy bank.
"The Long Johns — Subprime" [YouTube via Metafilter]