Reuters reports on Fed officials speech. "Those anxious about the housing market have urged the Fed halt its tightening cycle before it does substantial damage to property prices. But Dallas Federal Reserve President Richard Fisher sounded less worried and said the high number of home owners with fixed rate mortgages provide a buffer."

"In somewhat hawkish remarks, he also said U.S. growth would remain strong, provided the Fed keeps inflation under control and trade was not obstructed. 'As long as the Federal Reserve does its job of holding inflation at bay, and as long as our political leaders resist protectionism and other forms of interference with creative destruction, we will remain a productive economic machine,' he said in his prepared remarks."

"Those anxious about the housing market have urged the Fed halt its tightening cycle before it does substantial damage to property prices. But Fisher sounded less worried. 'It is not unreasonable to think the situation is manageable, albeit worth watching closely,' he said."

"Robert Schiller, a Yale economist and author of Irrational Exuberance, warns that Ben Bernanke's focus on the Great Depression has trained him to fight the wrong war. In 1929, house prices and commodities had been falling for several years, even if Wall Street was frothy. This time assets are on fire across the board."

"'We are now in the late stages of the biggest real estate boom in US history, driven by frenzied market psychology. In the near future, this could put Bernanke into uncharted territory for economic stress,' he said."

And Paul Muolo writes at NMN. "Fourth quarter production volumes were decent, but all lenders (prime and B&C alike) suffered from the profit margin blues. Payment-option ARMs have garnered a ton of negative press because of their risk to consumers but what about lenders? Here's the concern: when a borrower with a POA chooses the 'negative am' option the lender who made the loan gets to book the interest payment as 'accrued' even though the institution has not actually received the money from Joe and Mary Six-Pack."

"The more negative-am POAs a lender has on its books, the greater that receivable. From what I understand, that accrued interest can be booked as income. In other words, the lender gets to count something as income even though it actually hasn't received the cash yet. Now, maybe there's nothing wrong with that but it sounds very close to the gain-on-sale debacle that cratered the nonprime industry back in 1998/99."

"One analyst suggested to me that accrued (but uncollected) interest isn't so bad as long as the loans are properly underwritten. He also suggested that accrued interest results in a receivable being created that costs next to nothing. But here's one other issue to consider, if the firm with POAs is a REIT and it's hooked on paying dividends, what happens when volumes and profit margins hit the wall? We should have our answer by year-end. Then we'll see who's left standing."