Some housing bubble news from Wall Street and Washington. Paul Muolo, "You know loan volumes must be slow when lenders start doing stuff like this: Ditech.com said it is offering homeowners the opportunity to win a year's worth of mortgage payments (up to $25,000) in its 2006 ditech.com 'Home Mortgage Sweepstakes.' Ditech.com is part of the GMAC Mortgage family of companies...'"

"Friedman Billings Ramsey on Washington Mutual's third-quarter numbers: 'Earnings were clearly a disappointment. However, our primary concern is the fact that the expected margin expansion did not materialize while net charge-offs moved higher.'"

The Wall Street Journal. "Mortgage lenders are making it easier to get loans even as the housing market cools, and as the number of borrowers struggling to make their payments continues to rise, new studies show."

"'We're seeing rises in delinquencies and loan losses that are unrelated to what's going on in the job market,' says economist Mark Zandi. Among the areas that saw the biggest jump in the delinquency rate since the end of last year were Stockton and Merced, Calif., and Las Vegas-Paradise, Nev. Delinquency rates were highest in McAllen-Edinburg-Mission, Texas; Brownsville-Harlingen, Texas; and Detroit-Livonia-Dearborn, Mich."

"David M. Crosby, a Las Vegas bankruptcy attorney, says he has seen a 'surge' in borrowers with mortgage problems. 'Most of it is [tied to] the end of the housing boom, but I do see a good percentage of clients who got caught by a change in their mortgage rates.' In addition, some clients 'bought a number of speculative homes,' he says. 'The market turned on them, and now they are in a real financial mess.'"

"Some homeowners are calling it quits. 'A surprising number of people are walking away from their homes rather than trying to save them,' says Mr. Crosby, either because the rate on their loan has jumped or because they owe more than the home is worth."

From Bloomberg. "The slumping U.S. housing market is about to get a lot worse, according to traders of mortgage-backed securities and the so-called derivatives on which they are based."

"The ABX index, which measures the risk of owning bonds backed by home-loans to people with poor credit, rose 30 percent since Aug. 9 to the highest since January. There are more than $500 billion of such notes outstanding."

"'Delinquency trends and home prices' show a weakening real estate market, said Scott Eichel, head of credit trading for New York-based Bear Stearns & Co., the biggest underwriter of bonds backed by mortgages. 'A lot of investors that have concerns about the housing market'are using the ABX index to speculate on a continued drop, he said."

"'The unequivocally bad housing data we've seen' is prompting investors to seek to profit from potential declines in mortgage-backed securities, said Greg Lippmann, the head of asset-backed trading at Deutsche Bank in New York who helped create the ABX indexes in January."

"The default rate for subprime loans rose to 7.35 percent in July from 5.51 percent a year earlier, according to investment bank Friedman Billings Ramsey Group Inc. in Arlington Virginia. Nine percent of all subprime loans made in 2006 may default within five years, the worst performance since at least 1998, said Glenn Schultz, head of asset-backed securities at Wachovia Corp."

From Money Magazine. "How would you like a $10,000 gift certificate for Pottery Barn? A $30,000 in-ground swimming pool, installed? These and many other fabulous prizes can be yours if...you buy a house!"

"That's right, Bob Barker. After years of soaring prices, in the past few months the real estate market has dropped faster than most people thought it would, even in markets where most people thought it wouldn't."

"Home inventories have gone skyward in the past year. In August there were 4 million homes on the market in the United States, a million more than at the same point in 2005. Combine that with the boost in interest rates and you have a lot of nervous sellers."

"'Until now sellers didn't want to cut their prices. They were much more willing to provide an incentive, anything but cut the price," says Zandi. That's because incentives are cheaper for the seller in most cases. Right now, however, there's enough inventory that sellers are starting to do both: lower prices and provide incentives."

"Another finding from the NAHB survey: In order to help move inventory, more than a third of today's home builders have increased their use of brokers over a year ago, often paying them higher-than-average commissions."

"And there's more. 'Owners and builders are inviting us to cocktail parties, and they're giving bonuses and increased commissions,' says Diane Saatchi of the Corcoran Group. Most buyers don't realize that the agent is getting an incentive, and there's no legal obligation to tell them. 'But you can flat out ask a broker, 'Are you getting an incentive?' Then the broker has to tell,' says Saatchi."

"If a broker is getting an extra 2%, you will know that her 'This house is perfect for you!' declarations might not be heartfelt. You'll also know that the seller is desperate, so ask for a lower price. These days you just might get it."