Last week when Federal Reserve Chairman Alan Greenspan told a group at the Economic Club of New York "...there's a little froth in this market..." it was a word choice steeped in meaning.

Just what is 'froth'?

1. A mass of tiny bubbles.

2. A nasty sort of salivary foam released as a result of disease or exhaustion.

3. A fit of resentment or vexation.

4. Something unsubstantial or trivial.

5. All of the above.

You guessed it: e. Especially when it applies to the housing market.

"There are a few things that suggest, at a minimum, there's a little froth in this market... we don't perceive that there is a national bubble... it's hard not to see that there are a lot of local bubbles," Greenspan said in response to a question following a prepared speech about another topic -- energy issues.

Greenspan wasn't talking about the kind of tiny bubbles that make you feel happy. To the contrary, there is some indication those local bubbles are becoming more like regional foam and that's got the federal money managers frothing.

A Federal Deposit Insurance Corporation report in early May said a record 55 housing boom markets, 72 percent more than 22 just two years ago, could cause a bust much bigger than a mere froth forecast would suggest. That's especially true in large regions where boom markets are concentrated -- California and the West, New England and the Northeast and Florida.

"The notable expansion in the number of boom markets in 2004 suggests that national factors could be helping to drive home prices higher. If national factors are coming more into play, then clearly the most important factors to look to would be the availability, price and terms of mortgage credit," the report says.

During the Economic Club post speech question-and-answer session, Greenspan also said some of the froth comes from "very significant acceleration" in the turnover of U.S. homes, due in part to increased purchases of second homes.

Investors accounted for what's likely a record 23 percent of all home sales last year, according to the National Association of Realtors' research. The second home market accounts for 38 percent of the existing housing stock and 36 percent of all homes purchased last year, the NAR said.

Some of that is the nasty sort of salivary froth from heavy-breathing speculators rabid with greed, exhausting buyers with over valued properties.

Lenders' salivary glands have been getting a work out too.

Greenspan also said speculation in mortgage markets had accelerated, as more borrowers were reaching to purchase homes, perhaps beyond their means, using adjustable-rate and interest-only loans to make houses more affordable.

Greenspan's Federal Reserve, along with the Office of the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Office of Thrift Supervision and the National Credit Union Administration, recently put home equity lenders on notice with stiff federal guidelines to control the danger of stuffing portfolios with too many risky home equity loans.

While the guidelines tell lenders and their underwriters to toe the line, consumers may also have to make sure they maintain their income, credit, debt and other qualifying financials on par with the levels that qualified them for the loan in the first place.

If lenders comply and tighten underwriting guidelines, or worse, cut off equity lines of credit, borrowers will become vexed about the sudden disappearance of easy money and that's more than enough to cause any borrower to bubble over with resentment.

Fortunately, there's still ample room for that trivial, unsubstantiated form of froth spawned by bubble talk one day and boom boasting the next.

During the same Economic Club meeting, Greenspan said home prices likely will remain strong, only flattening at best, as long as builders fail to keep up with the demand. Baby boomers, immigrants, first time home buyers and otherwise previously under-served buyers cashing in on easy money -- along with the speculators -- create a demographic that belies a housing market collapse.

"Even if there are declines in prices, the significant run-up to date has so increased equity in homes that only those who have purchased very recently, purchased just before prices actually literally go down, are going to have problems," Greenspan said.