File this under “not good:” Standard & Poor’s issued a statement today outlining growing concern over the Alt-A mortgage market, saying that “there are strong — and growing — indications of deteriorating performance in the 2006 vintage.” From the horse’s mouth (registration req’d):

The percentage of Alt-A loans that are 90 or more days delinquent (including loans that were foreclosed and represent real estate-owned assets, are in foreclosure, or are in bankruptcy) for the 2006 vintage is 2.5 times higher than the previous year’s figure and more than 4 times that of the 2004 deals with the same amount of seasoning… For example, after 14 months of seasoning, 90-plus-day delinquencies stand at 4.21% for the 2006 Alt-A vintage, excluding pay option ARM loans. This compares with 1.59% for the 2005 vintage and 0.91% for the 2004 vintage after 14 months of seasoning.

S&P pointed to how quickly this deterioration has taken place, characterizing the trend as “disconcerting” — and echoing comments made (mostly too late) during the subprime credit crunch. Looks like the agencies are bound and determined not to make that mistake again. If asset performance is the root of current problems in the subprime mortgage market, we may be in for a slow, painful replay of that unwinding process. The question is: how much worse will Alt-A get? I fear we’re about to be besieged by media stories on “subprime contagion” all over again. Update: For those who can’t read the S&P press release, here’s a Bloomberg story on the same subject (hat tip, Calculated Risk).