Some housing bubble reports from Wall Street and Washington. "Home-building and mortgage-banking company NVR Inc. Tuesday said net income dropped 32% from the previous year and lowered its outlook on continued deterioration in the U.S. housing market. The company said its gross margins continue to suffer from pricing pressure in many of its markets. Citing lot deposit impairments and the continued deterioration of the housing market."

"'We expect margins to continue to fall based on land deposit impairments in the coming quarters and continued weakness on pricing,' wrote Banc of America Securities analyst Daniel Oppenheim."

"New orders in the third quarter decreased 18 percent from last year. Meanwhile, the cancellation rate jumped to 27 percent from 15 percent last year and 13 percent in the second quarter of 2006. NVR warned that pricing pressure in many of its markets, which include Washington and Baltimore, will weigh on profits."

From Reuters. "Wells Fargo, the No. 2 U.S. mortgage lender after Countrywide, said fee income from mortgages fell 35 percent to $484 million. Applications fell 18 percent to $95 billion, and unclosed mortgages as of Sept. 30 fell 17 percent to $55 billion from a year earlier."

"'It's not surprising to anybody that the housing market has slowed,' CFO Howard Atkins said."

"Downey Financial Corp. reported net income for the third quarter of 2006 totaled $57.2 million, down 4.3%. Daniel Rosenthal, CEO, commented, 'Back in March of this year, we increased the start rate on option ARMs originated for portfolio to reduce the potential for negative amortization. We also indicated that we would continue to closely monitor trends in the residential housing and lending markets and would make further pricing adjustments as deemed appropriate.'"

"Provision for credit losses totaled $9.6 million in the third quarter of 2006, compared with a reversal of $0.8 million a year ago. During the current quarter, the California residential real estate market continued to show signs of weakening, with a decline in prices beginning to emerge in certain segments for the first time."

"Other income totaled $30.7 million in the current quarter, down $14.9 million from a year ago. Contributing to the decline between third quarters was a $14.7 million decline in net gains from sales of loans and mortgage-backed securities due to a lower volume of loans sold."

"Loan originations (including purchases) totaled $1.605 billion in the current quarter, down $2.039 billion or 56.0% from $3.644 billion a year ago. Loans originated for sale declined $876 million or 51.5% to $824 million, while single family loans originated for portfolio declined $1.147 billion or 60.0% to $765 million."

"National City Corp., the No. 8 U.S. bank, set aside $73 million for bad loans, up 30 percent. Net charge-offs rose 41 percent to $117 million, including $10 million of 'fraud-related mortgage loan losses,' while nonperforming assets rose 16 percent to $689 million, in part because of real estate foreclosures."

The New York Sun. "Don't get relaxed about the housing industry, because it's going to get much, much worse. That's the message from Gary Gordon at Annaly Capital Management, a firm which invests in mortgage-backed securities."

"Bears argue that the consumer has used his home ownership as a piggybank that is now ominously empty. They point out that mortgage equity withdrawals have climbed almost without pause since the early 1990s. Today, these borrowings are plummeting, a development that the folks at economics consultancy ISI call 'unprecedented.' Equally without precedent is that existing home prices may actually decline this year."

"Further gumming up the works is that confidence in rising home prices turned lenders into enthusiastic coconspirators. Mortgage lenders have required less information about borrowers and less regular payments on loans than ever before."

"As an example, 62% of non-agency loans made last year had low or no income verification, up from 24% in 1998. Also,52% of such loans made in 2005 had zero or negative amortization requirements. In 1998 there were no such loans."

"Mr. Gordon says that affordability is key. Home prices have increased at the second fastest rate in over a century. This rapid cost increase means that many people are simply priced out of the market."

The Star Telegram. "Real-estate lending is coming under increasing scrutiny from federal regulators. 'You're beginning to hear conversations that it's getting harder' to arrange bank financing for real estate, said Tony Landrum, developer of The Tower high-rise condo in downtown Fort Worth."

"One threshold would be when all commercial real-estate loans, with some exceptions, amount to more than three times, or 300 percent, of a bank's capital. John Dugan, chairman of the Office of the Comptroller of the Currency said 35 percent of the banks it oversees exceed the 300 percent guideline. In 2000, real estate accounted for 28 percent of the loans at U.S. banks with less than $1 billion in assets, Federal Deposit Insurance Corp. Chairman Sheila Bair said. She said that as of March that had risen to 42 percent."

From Bloomberg. "Most U.S. home markets are in bear mode as anxious sellers growl and buyers are scarce. All of the leading indicators now painfully confirm that. To all the existing indexes, I'd like to add one more: The Donald Trump Index."

"Last year, when the home market peaked, the Real Estate Wealth Expo, featuring Trump and 70 other money mavens, charged as much as $499 per person and attracted more than 60,000 participants."

"Recent ads for the event offered a price as low as $99 for similar seminars that are scheduled in cities such as New York, Chicago, Boston, Los Angeles and Toronto. Is there any connection between the 80 percent drop in the Trump Index and the measurable decline in the market?"

"Mass psychology often trails economic reality. Academic studies show that amateur investors consistently lose interest after having bought at the top of most market cycles. This time won't be much different."