Some reports on the housing sector. "Rising interest rates, increasing costs for construction materials, and the decline in housing sales are having an impact on spending for home renovations. A broader monthly report on construction outlays indicates that renovations have declined 10 percent in the first quarter of 2006 from a year ago."

"Although housing experts are optimistic about home improvement spending this year, a steeper-than-projected decline in house sales would raise concerns."

"Home Depot CEO Bob Nardelli expressed disappointment about sluggish retail sales. The DIY sector has been growing strongly for years in the US as surging real estate prices and solid economic growth have encouraged spending on home improvement. But analysts fear that a slowdown in the housing market, combined with the effects of rising fuel prices and interest rates could depress sales this year."

"ECC Capital Corp., a real estate investment trust based in Irvine, Calif., has reported a net loss of $6.4 million in the first quarter, a big improvement from the fourth-quarter results of the troubled mortgage REIT but a bigger loss than it recorded a year earlier. The company announced earlier this year that it would consolidate seven wholesale loan processing centers into three and lay off more than 440 employees."

From Paul Muolo. "Last week when Aames Financial reported a $6 million loss for the first quarter it also revealed that it is in 'discussions with several parties regarding a potential merger or sale' of the company."

"NMN reported that Impac Mortgage Holdings was considering offers. In releasing its earnings, company CEO Joseph Tomkinson said, 'As competition has intensified, many of our competitors have relaxed their underwriting guidelines and created what we believe to be more layered risk in the market. Essentially, we are not comfortable investing in certain higher-risk mortgage products, and as a result have revised our underwriting guidelines and adjusted pricing.' A few months back Impac rolled up its subprime unit, Novelle, into IMH."

"The clock is ticking on legislation to create a new regulator for Fannie Mae and Freddie Mac, the Mortgage Bankers Association said last week. MBA's chief lobbyist, Kurt Pfotenhauer, said the now-or-never point is rapidly approaching in the effort to create a new, more powerful regulator for the government-sponsored enterprises. 'If GSE reform is going to go forward, action has to be taken soon,' Mr. Pfotenhauer told reporters."

"Fannie Mae said Monday that it would temporarily suspend issuing certain medium-term debt securities until May 23, the day its chief regulator will release a massive special examination into the mortgage company's accounting and management problems. Fannie Mae said Friday that it would suspend issuing noncallable benchmark notes in May, the first time it's elected not to issue since December 2004, but did not indicate why."

"A slowdown in the mortgage industry has claimed Liberty Home Loan Corp. as a victim. The Tampa-based company at its peak had as many as 110 employees and six offices. MortgageDaily.com reported the closing in April and May of three large firms. Dozens of other mortgage companies are 'teetering on which way to go,' said Sam Garcia, editor."

"Rising interest rates on home loans and tougher underwriting standards have put pressure on all mortgage companies, said Joseph Falk, the Miami-based legislative chairman of the National Association of Mortgage Brokers. When interest rates were falling, it was easy to hire staff and put loan officers to work because there were more customers than mortgage originators available, Falk said. But with rising rates, there are fewer customers. Nationally, new loans fell by nearly 20 percent in the first quarter of 2006."

"'As production falls, this leads to overcapacity of loan officers and mortgage companies,' Falk said. 'There are not enough loans to go around.'"

"There were 6,555 layoffs in the U.S. mortgage industry between November 2005 and April 2006, according to the trade publication National Mortgage News. 'There are more people in the industry than the industry can support,' said Michelle Taylor, a board member of the Gulf Coast chapter of the Mortgage Bankers Association of Florida."

"It's tougher for new companies, said Taylor, a 25-year veteran of the mortgage industry. 'If you grow too soon too fast, you don't know how to prepare for a down cycle.'"