Some housing reports from Wall Street. " The nation's largest home builder, Ft. Worth, Tex.-based D.R. Horton said fourth-quarter net sales orders for new homes dropped 25% from a year earlier on sluggish demand for housing. 'The current selling conditions in the home-building industry continue to be challenging, with higher-than-normal cancellation rates and increased use of sales incentives in many of our markets,' said Chairman Donald Horton."

"Its cancellation rate for the latest quarter rose to 40%, up from 29% the prior year. 'As fundamentals continue to deteriorate and buyer sentiment sours further, we think Horton and other builders will continue to have a primary focus on working through inventory by reducing prices and increasing incentives,' wrote Banc of America Securities analyst Daniel Oppenheim."

"Also Tuesday, KB Home said quarterly orders fell 43% from a year earlier."

"In the filing, KB Home reported new home orders slid 43 percent to 5,989 in the quarter, weighed by a 53 percent drop in U.S. orders."

"The company's housing backlog slid 14 percent to 23,878 units at the quarter's end, while the value of the backlog fell 8 percent to about $6.53 billion as home prices fell across the country."

"KB Home said it plans to file the delayed 10-Q on or before Dec. 24, in order to avert defaulting on its debt. The company said the delayed filing could trigger a default on some of its debt and impair its ability to borrow against its credit facility, but was in talks with its lenders to get extensions."

"William Lyon Homes announced today new home orders for the three months ended September 30, 2006 were 501, a decrease of 40% as compared to 834 for the three months ended September 30, 2005. New home orders for the nine months ended September 30, 2006 were 1,698, a decrease of 41% as compared to 2,861 for the nine months ended September 30, 2005."

"The Company's cancellation rate for the nine months ended September 30, 2006 was 33%, compared to 13% for the nine months ended September 30, 2005."

"The Company's backlog of homes sold but not closed was 1,040 at September 30, 2006, a decrease of 55% as compared to 2,299 at September 30, 2005. William Lyon Homes is primarily engaged in the design, construction and sale of single family detached and attached homes in California, Arizona and Nevada."

"M/I Homes, Inc. announces homes delivered for the 2006 third quarter decreased 11% to 927 from 2005's 1,047. Robert H. Schottenstein, CEO, commented, 'Market conditions continue to be challenging in most of our markets and are reflected in our unit results. The macro-economic factors giving rise to these conditions are well documented and, at this point, there appears to be no evidence that conditions will improve in the near-term.'"

"Mr. Schottenstein, continued, 'With respect to the quarter, our new contracts were negatively impacted by increased cancellation rates, the impact of inventory oversupply in most of our markets and weak demand.'"

"The Company has homebuilding operations in Columbus and Cincinnati, Ohio; Indianapolis, Indiana; Tampa, Orlando and West Palm Beach, Florida; Charlotte and Raleigh, North Carolina; Delaware; and the Virginia and Maryland suburbs of Washington, D.C."

From Paul Muolo at National Mortage News. "For years, Friedman Billings Ramsey was the 'holy roller' of mortgage REITs, preaching the benefits of using the structure when taking residential lending firms public. And for years, some firms bought the speech, went public, and paid out a lion share of their earnings in the form of dividends."

"Then a 'correction' swept the subprime sector in mid-2005, a correction that is still occurring. But what about FBR itself? Last week the investment banking firm shut down he division that gathered residential product for securitization into ABS. But guess what? FBR, a spokeswoman confirmed, also shut down its mortgage trading desk. She said the company, however, has not closed the group that takes mortgage firms public. (There were rumors to that effect.)"

From Fitch Ratings. "Fitch believes the recent rise in U.S. loan repurchase activity serves as a reality check for mortgage originators rather than the beginning or acceleration of a troubling trend according to a new Fitch special report."

"Although early payment defaults were the root cause of the increased repurchase activity, the Fitch report contends that secondary market behavior was largely responsible for the unexpected repurchase provisions recognized by some mortgage originators."

"Although the impact of alternative mortgage products and adjustable-rate mortgage resets have yet to be felt, Fitch views the recent repurchase uptick as a rational self-correcting mechanism."

"'Mortgage companies are quickly playing catch-up with the changing rules of the game,' said Vincent Arscott, a director in Fitch's Financial Institutions group, referring to mortgage originators tightening underwriting guidelines. The report revealed that 'risk-layered' products, lower FICO, second lien, stated income loans, were the biggest loan repurchase offenders."

From Inman News. "Federal regulators recently suggested new guidelines for banks that originate certain types of high-risk mortgages. The banks, predictably, were not enthusiastic about the regulators' suggestions. But the regulators have it right: It's high time for banks to limit access to these mortgages and disclose the real risks to borrowers."

"Interest-only and payment-option loans were supposed to be intended for sophisticated borrowers who could take advantage of the greater flexibility. The fact that so many of these loans were sold to people for whom they weren't intended begs an obvious yet important question: Why didn't regulators insist on tougher guidelines a long time ago?"