Some homebuilder news. "The homebuilder Hovnanian Enterprises said Friday third-quarter earnings will come in below its previous targets, as the housing slowdown is leading to slower sales and higher cancellations. 'Our anticipated financial results for the remainder of 2006 continue to be negatively impacted by a slower sales pace, high cancellation rates on contracts in backlog that were projected to close this year, and more pronounced use of concessions and incentives, particularly on the resale of those homes which have experienced contract cancellations,' said Ara Hovnanian, CEO."

"The homebuilder said it is renegotiating a 'significant number' of its land options contracts, which is expected to result in walkaway costs."

"Dominion Homes today announced..a net loss of $5.9 million. Douglas Borror, CEO, commented, 'While we are disappointed with reporting a loss for this quarter, we also recognize that overall home sales conditions remain challenging in our markets. New building permits declined 27% in Columbus, 39% in Louisville and 20% in Lexington during the first six months of 2006.'"

"A $6 million impaiment charge connected to operations in Tennessee led to a second quarter loss for Fort Lauderdale-based Levitt Corp. in the second quarter 2005. Because of reduced demand in Tennessee and other markets, Levitt reduced its workforce by 9 percent in July."

And National Mortgage News has this round-table discussion from some lending executives. "Broker magazine editor Brad Finkelstein had an interesting discussion with subprime industry participants at (a) symposium in Las Vegas, with participants Ken Logan, WarehouseUSA Capital Corp.; Michael McQuiggan Lenders Direct Capital Corp.; and Brenda White, Deloitte & Touche Capital Finance LLC."

"BRAD: Our morning keynoter said we are about to see a second wave of subprime companies crashing. Do you agree? BRENDA: I agree with that. I think we are seeing it already. What I am seeing, is that buybacks, in particular November and December that were really, really tough. It caused people to lose money."

"KEN: The really larger ones, the investor level, they are taking losses. As a warehouse lender, I see a lot of the balance sheets. I can't tell you the last time I've seen a loan-loss reserve account on a balance sheet from a company. For somebody who doesn't have a big safety net in the first place..they are just playing with fire at that point. Sooner or later there is going to be a repurchase and they're totally unprepared for that."

"KEN: Before, it used to be a lot of kicks on appraisal reviews. You are not seeing as much or hearing as much about that? MICHAEL: Companies are not adjusting to the softening of the market, and they're still taking appraisals and not bothering to see if the value is holding."

"MICHAEL: A high percentage of our appraisals in the last 45 days are getting cut. So we're lowering the values and everybody is screaming. But we're not going to go with increased values, and everybody is pushing to get the highest value out of the house."

"BRAD: Who is cutting the appraisals? MICHAEL: The review companies. When the appraisal gets cut, and they document, 'here are some more comps two doors away that you didn't utilize that sold for $15,000 less,' they have the opportunity to go back to the original appraiser and have him try to support his value. Nine times out of 10 it is the lower value that ends up staying, at least in our organization."

"MARK: Are you seeing more fraud? MICHAEL: It has been a long time that I have been doing this, and I've got the first two fraud loans in the past year that were total appraiser, title company, everybody involved. The biggest fraud issue that I see..is dealing with the stated income and making the stated income reasonable for the right profession. BRENDA: It is usually collusion."