The Mortgage Bankers Association came out with two reports on housing today that are not exactly full of good cheer.

There is clear, indisputable evidence contained in those reports that defy the media's cry of an alleged housing market recovery.

First is the Mortgage Purchase Applications Report. It reveals that mortgage purchase applications were 24.1 percent lower than the same week one year ago.

Michael Fratantoni, MBA’s Vice President of Research and Economics states in the report, “Purchase applications plummeted 27 percent last week and have declined almost 20 percent over the past month, despite relatively low interest rates. The data continue to suggest that the tax credit pulled sales into April at the expense of the remainder of the spring buying season. In fact, this drop occurred even as rates on 30-year fixed-rate mortgages continued to fall, and at 4.83 percent are at their lowest level since November 2009.”

The other report released today, the MBA National Delinquency Survey, reveals that fully one in ten mortgage holders is now delinquent, meaning late on at least one payment. The first-quarter rate of 10.06 percent is up about 1 percent from a year ago levels. That is an all-time record high.

The two reports indicate that fewer people want to buy homes and more people are at risk (and will be) losing their homes.

How in the world is that a housing recovery?

Answer: It isn't.

There are 4 things you need to be aware of regarding the true state of the housing market. The National Association of Realtors, the National Association of Homebuilders, the National Association of Mortgage Brokers, the National Electrical Contractors Association, the Plumbing-Heating-Cooling Contractors Association, the National Roofing Contractors Association, the Carpet and Rug Institute, the Association of The Wall And Ceiling Industry, the American Moving And Storage Association, and all homeowners who are trying or hope to sell their homes at pre-crash (bubble) prices would rather you not be aware of these 5 inconvenient facts.

These 5 facts are:

1. The worst of the foreclosure mess is yet to come.

As mentioned above, one in ten mortgage holders is now delinquent. Quarter after quarter, this statistic continues to worsen, which means only one thing: the number of foreclosed homes will continue to rise. It is not until we see the mortgage delinquency rate start to fall, we cannot even begin to think about the foreclosure crisis reaching a peak.

The formula for the housing market in the next few years is very simple:

more delinquencies = more foreclosures = more supply = lower prices

2.The downward spiral of homes values is not over.

As the number of foreclosed homes continues to rise, ever more downward pressure it put on home prices as a result of increased distressed inventory. The media will not tell you that home prices were bid up to unrealistic prices in the housing bubble, and must now drop back to sustainable levels. Common sense will tell you that if home prices are falling, most home buyers will wait until bottom to make their purchase in order to obtain the best deal. If home buyers wait to make their purchases, it will put even more downward pressure on prices due to a lack of demand. Never ask your barber if you need a haircut, and never ask your realtor if home prices have bottomed; the answer will always be yes.

3. The tax credits did not save the housing market.

The primary result of the tax credits was to pull forward some demand into the tax credit umbrella. There is no question that some buyers who were not planning to make a home purchase did make a home purchase because of the opportunity to take advantage of the tax credit. However, the tax credit did not structurally change the housing market dynamics for the better, but merely delayed somewhat the downward spiral in home prices.

4. Now is a good time to buy at depressed levels, before prices recover to where they were a few years ago.

Home prices are simply not going to recover in the next few years. The trend in home prices has been down, and that trend is ongoing. Home prices, while they may seem attractive based upon bubble valuations of a few years ago, are still too high. With more foreclosures in the pipeline, tighter lending standards, and an anemic job market, conditions are in place for further home price declines. There is no hurry to buy a home now for fear that prices are soon to jump. Patience will bring lower home prices.

5. The secondary mortgage market is now virtually entirely government-funded.

During the housing bubble Wall Street was earning massive fees from securitizing bundles of mortgages. Unfortunately their greed caused the demise of the private secondary mortgage market, due to the fact that Wall Street firms bundled up any and every possible mortgage they could get their hands on and paid the ratings agencies to rubber stamp those bundles with the coveted AAA rating.

As we now know, bundles of subprime mortgages should not have been given AAA status. Billions of dollars worth of these bundles were bought by investors who have since discovered their true worth was far, far lower. The result is that the entire financial world no longer has an interest in buying bundled mortgages. It is now the quasi-government agencies that are the only buyers of last resort functioning in the secondary mortgage market.

Contrary to popular belief, the U.S. Government does not have an endless supply of money. The time will shortly come when the Government will have to greatly curtail or even end their financing of Fannie and Freddie. When that day arrives, funding for mortgages will nearly completely dry up. Home prices will fall significantly as a result.