UPDATE: The Big Picture has details on the conference call announcing these results.

Countrywide Financial Corp. had very bad Q2 profit numbers:

The rise in credit-related costs were primarily related to the company’s investments in prime home equity loans, Mozilo said.

Unlike subprime loans, which target borrowers with spotty credit histories, prime loans are typically available only to those with solid credit profiles who are considered less risky.

The rise in delinquencies and projections of more defaults led Countrywide to write down the value of securities backed by prime home-equity loans by $388 million in the quarter, reducing earnings by 40 cents per share.

That lowered their Q2 profit by 50%. Now why would this be happening? Dumb people? Not exactly:

The company said the delinquencies were not due to borrowers struggling with mortgage interest rate resets, as many had expected.

Instead, the delinquencies have been largely due to people losing their jobs or similar factors, the company said. Those homeowners have been unable to refinance because the value on their home has fallen and the credit crunch has cut off other borrowing options.

"I do think it’s important to observe what happens going forward," Mozilo said. "We are experiencing home price depreciation almost like never before, with the exception of the Great Depression."

The story is that well-off or financially-reliable people are having a bad, bad time. Check out this story from the Chicago Tribune:

The Kaneville-based public-records tracker looked at foreclosures involving mortgages of $350,000 and higher and found 584 in those two counties in the first five months of 2007, more than double the 265 recorded in the same period last year and 117 in 2005. For comparison’s sake, the median home price in the Chicago area is $252,000.

In many cases, the owners had the mortgage for less than a year, said Patty Maier, Record Information’s data management director. "Are these cases of biting off more than they could chew or faced an unexpected personal crisis? Maybe a little of both," she said.

Those Republican voters aren’t voting this time. When people start saying things like "never before with the exception of the Great Depression" something is really, really serious.