Observations about a housing bubble being once again inflated in many areas in the US have transitioned from bloggers throwing around unpleasant party-pooper data to mortgage bankers.

In a survey conducted by the Professional Risk Managers’ International Association for FICO – the same company after which the infamous and ubiquitous FICO score is named – found that industry insiders directly involved in mortgage lending are now on edge. They’re seeing from the close-up viewpoint what we have seen for over a year, and what the Fed still refuses to see – while it categorically declares that it cannot be seen by anyone in the first place.

So 56% of the mortgage banker respondents fretted that “an unsustainable real estate bubble is inflating.”

Andrew Jennings, chief analytics officer at FICO, which describes itself as a predictive analytics and decision management software company, explained the phenomenon this way:

“The home loan environment has bifurcated. Six million homeowners in the U.S. are still underwater on their mortgages, with the average negative equity a whopping 33%. Yet with home prices soaring in many cities, total homeowner equity in the U.S. is at its highest level since late 2007. That doesn’t feel like a healthy, sustainable growth situation. No wonder many lenders in both Canada and the U.S. are concerned about the risk in residential mortgages.”

For 58.8% of the mortgage bankers, consumers’ “high debt-to-income ratio” was their top concern when approving loans. Good American consumers have picked up their old habits again: the hole left behind by declining real incomes while consumption always has to rise is filled with debt. That has become the American corporate  dream. And that’s what the Fed had planned for them.

As these folks have been piling on more debt to live the American corporate dream to the fullest, “lenders are understandably concerned” about these piles of debt, said FICO’s executive VP Mike Gordon. And that has been happening, according to the survey (detailed report). “For the last two quarters, around 65% of our respondents said they think credit card balances are headed higher,” he said. “Those are the two highest figures we’ve ever seen in this survey.”

Deleveraging is over. Debt is king. And bankers, Gordon said, are now “wary of a return to reckless borrowing.”

Fed heads refuse to see the housing bubble, though they could see it if they just opened their eyes, and they could hear about it from mortgage bankers if they asked, just like FICO did. But the Fed isn’t in the business of looking for bubbles, and it certainly isn’t in the business of pricking them, if it accidentally stumbles into them and can’t deny them any longer. It’s in the business of creating them. And it’s good at it. This time, it only took them about six years, which must be a record.

This isn’t the first time that this sort of thing bubbled up. Just yesterday, I reported that senior bankers are “privately warning” that the record bank lending binge “should not be seen as evidence of an economic recovery.” Instead, they’re fretting about the greatest credit bubble in history. Read….  Senior Bankers Warn: ‘It’s Crazy, It’s a Boom, It’s a Gold Rush’

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