Loans in the prime loan market are going delinquent for all the traditional reasons: economic conditions and life events, such as job loss, medical problems, and divorce. In a rising or even stable price environment, these delinquencies would often be cured through refinance or sale of the property, which would result in low levels of actual foreclosure.
However, loss of equity and tighter standards on all types of mortgages mean that even prime loans are more difficult to refinance, and weak housing demand has made it difficult to sell.