Some housing bubble news on the lending front. "Annaly Capital Management, Inc.today reported $852 million face amount of securities were sold, resulting in a realized loss of $1.2 million. In addition, the Company had a loss on other-than-temporarily impaired securities as of June 30, 2006 of $20.1 million. Of the $20.1 million, $15.7 million resulted from further declines in the value of securities classified as other-than-temporarily impaired at March 31, 2006."

"Michael Farrell, CEO, commented, 'The two additional 25 basis point increases to the Fed Funds rate during the second quarter brought the total to 425 basis points over the 17 meetings since June 30, 2004. Market conditions, therefore, continued to be a challenge for strategies such as ours as the protracted sell-off in the front end of the yield curve pressured the value of our assets and raised our cost of funds relative to the yield on our assets.'"

"MFA Mortgage Investments, Inc. today reported a net loss available to common stockholders of $21.8 million for the second quarter ended June 30, 2006. Stewart Zimmerman, MFA's CEO said, 'As previously indicated, increases in the target federal funds rate have increased the cost of MFA's liabilities at a more rapid pace than the yield on its assets, negatively impacting portfolio spreads.'"

"Mr. Zimmerman continued, 'MFA undertook a further repositioning of its portfolio in the second quarter of 2006. This repositioning consisted of the sale of approximately $1.035 billion of MBS with realized losses of approximately $24.7 million. This MBS sale was predicated on a number of factors, including the negative impact of Federal Reserve tightening, increasing inflationary pressures from higher capacity utilization..and the relatively flat and at times inverted yield curve.''

"Increased lending in a slowing housing market helped New Century Financial Corp., one of the largest U.S. subprime mortgage lenders, boost quarterly profit 11 percent, but earnings rose less than expected. Profit rose despite 'a very challenging market environment,' said CEO Brad Morrice. Delinquencies rose and Morrice said New Century is seeing 'isolated' markets where home prices are flat or declining."

"Referring to the earnings shortfall, he said: 'If we had sold all the loans we originated, we would have more than made up the difference.'"

From MarketWatch. "It is becoming increasingly obvious that financial advisers, real estate experts and parents will someday point to what is happening in the mortgage market today and use it as a cautionary tale of what can go wrong when a buyer stretches to get too much house during a market that seems invincible."

"'There is no apples-to-apples comparison from the kind of mortgage someone could get a year ago and what they can get today,' said Anthony Hsieh, president of LendingTree.com. 'As rates rise on adjustables, there are steps people can take to reduce the sticker shock, but they're probably not going to be too happy with what they have to swallow now.'"

"'People's choices are only going to get uglier, and plenty of people are on their way to trouble. For everyone who has avoided this trouble, they're going to look back someday, when their kids are looking for a mortgage and are tempted to stretch too far by using an ARM, and have stories to tell about how they saw a time when everything that could go wrong with that strategy did go wrong,' said Greg McBride, senior editor at Bankrate.com."

The Washington Post. "In a new sign of the continued deterioration in the housing market, applications for home loans plunged to a four-year low last week. Lenders 'are seeing their volumes down, not just for purchases but also for refinancing,' said Jay Brinkmann, a financial economist with the Mortgage Bankers Association."

"'It's pretty bad,' said Christopher Cruise, who trains mortgage brokers and is based in Rockville. 'The problem is that the high was so high and the low is so low. Now it's not just the end of the refinancing boom, but people aren't buying either. There's been a real drop off in purchases.'"

"Cruise said attendance at some of his classes has dropped by 50 percent, and he has canceled some classes for lack of interest. 'It's causing some pain for some people,' Brinkmann said, adding that declining loan volumes are cutting into lender profits. 'Some will go off to a different field,' Brinkmann said. 'They may need to go out to find a different line of work to support their lifestyles if the income is no longer there.'"