Some housing bubble reports from Wall Street and Washington. "Ratings agencies would have to give Fannie Mae and Freddie Mac additional scrutiny under a proposal that lawmakers will consider on Wednesday. One amendment would require ratings agencies to publicly disclose any work they do for one of the government-sponsored enterprises."

"Another would compel the agencies to judge each enterprise's risk as if the government would not bail it out in the case of a default."

"Ohio Attorney General Jim Petro brought suit against Fannie Mae on Friday in the latest of several legal actions against the nation’s largest secondary market lender. The class-action lawsuit was filed on behalf of the Ohio’s public pension funds and other Fannie Mae stockholders and charged that Fannie Mae Corporation and its top executives 'manipulated earnings in a fraudulent scheme to deceive investors about (its) true financial state.'"

"Two groups of stockholders have also sued Fannie Mae in the last few weeks, and if previous state government originated lawsuits, such as..against tobacco companies, expect to see many other states follow Ohio’s lead."

"U.S. mortgage applications last week sank to their lowest level in over four years, an industry trade group said on Wednesday, further evidence that the once robust U.S. housing market is weakening."

"Drew Matus, senior financial economist at Lehman Brothers, said that while the indexes are volatile on a weekly basis, they point to a sector that is softening. 'The data suggest that the housing market is cooling and it's cooling pretty substantially,' he said."

"In the second quarter of 2006, 88 percent of Freddie Mac-owned loans that were refinanced resulted in new mortgages with loan amounts that were at least five percent higher than the original mortgage balances, according to Freddie Mac's quarterly refinance review."

"This percentage is up from the first quarter of 2006, when the share of refinanced loans that took cash out was a revised 86 percent, and is the highest since the second quarter of 1990."

"'This quarter we saw $81.0 billion cashed out, up from a revised $74.1 billion cashed out in the first quarter of 2006,' said Amy Crews Cutts, Freddie Mac deputy chief economist."

"'Borrowers are reacting to both incentives to cash out home equity through refinance and incentives to change their mortgage as they hit an interest rate adjustment. Freddie Mac estimates that $500 billion in first lien mortgages will adjust this year and another $650 billion in second liens will see at least one rate change this year, said Frank Nothaft, Freddie Mac chief economist."

"Pending home sales, a leading indicator for the housing sector, have risen for the last two months, according to the National Association of Realtors. The index, based on contracts signed in June, is 9.6 percent below June 2005."

"The Fed meets Aug. 8 to consider whether the slowdown and 17 straight interest-rate increases will be enough to curb inflation pressures."

"'Slower increases in house prices could put a crimp in consumer spending,' Federal Reserve Bank of San Francisco President Janet Yellen said. 'While I expect the housing situation to have only moderating effects on economic activity going forward, I should note that we can't ignore the risks of more unpleasant scenarios developing.'"