The reason many mortgage lenders are in trouble became alarmingly clear yesterday. The Mortgage Bankers Association said more than 2.1 million Americans with a home loan missed at least one payment at the end of last year — and the rate of new foreclosures hit a record.

The problem is most severe for borrowers with scuffed credit and adjustable-rate mortgages. More than 14 percent of them were behind on their payments. And the worst is yet to come, the MBA said. At least $300 billion in subprime ARMs will reset this year to higher interest rates. Those borrowers face higher payments and a harder time refinancing.

Blindsided by the number of loans that have already gone bad, more than two dozen lenders have gone out of business or been purchased. New Century Financial, the nation's second-largest subprime lender, has quit making loans and is edging toward bankruptcy protection.

"There's been a stunning erosion of mortgage quality," said Mark Zandi, chief economist at Moody's Economy.com. "It's primarily in the subprime market, but the entire market is weakening ... and that adds to problems in the housing market, and by extension, the broader economy." Retailers are already feeling the effect, he said, because homeowners tend to spend less when they fear their homes are worth less.

To stem their losses, lenders are ending 100 percent financing plans, requiring better credit scores and demanding more proof of a borrower's income. The stricter rules are squeezing first-time buyers, as well as homeowners who want to refinance.

Sellers, meantime, must compete with a rising number of foreclosures at cut-rate prices. Lenders that seize control of a house are usually aggressive about selling it, to limit the cost of maintaining and marketing it.

It's like a one-two punch, Zandi says. "It means less demand because many potential borrowers will be locked out," just as foreclosures expand the supply of homes for sale.

Some economists, such as Patrick Newport of Global Insight, had been expecting the real estate market to rebound soon. Now, he says, "We probably won't see a recovery in the housing market until next year."

In fact, sales of new homes are expected to fall 10 percent this year, while sales of existing homes are likely to slip about 1 percent, the National Association of Realtors said yesterday.

States with the most job losses are seeing the largest number of delinquencies. In Mississippi, Louisiana, West Virginia, Michigan, Alabama, Missouri and Tennessee, at least one in five subprime ARMs is in default.

In the final quarter of last year, 0.54 percent of homeowners with a mortgage began foreclosure proceedings — a record — up from 0.46 percent in the third quarter.

Calls from distressed homeowners to the Homeownership Preservation Foundation, a free credit counseling service — (888) 995-HOPE or (888) 995-4673 — have more than doubled from last summer.