Some housing bubble reports from Wall Street and Washington. CNN Money, "Washington Mutual's chief executive said that he expects 2007 to be another tough year for the U.S. mortgage industry, which faces overcapacity and unsustainably low margins. Kerry Killinger, CEO of the largest U.S. savings and loan, acknowledged that a sweeping correction in U.S. housing prices would lead to higher delinquencies and loan losses."

"'In our guidance we've assumed that the mortgage industry would be about as tough next year as this year,' Killinger said, adding that he would not be surprised to see 'multiple years' of housing prices lagging inflation and other asset classes."

"Industrywide, mortgage origination fell by 35 percent between 2003 and 2006, while industrywide head count rose 8 percent in the same period, he said. 'There is a total disconnect in mortgage banking between realistic levels of production that are going to happen and the level of employment,' he said."

The Scotsman. "The World Bank yesterday said a global slowdown was firmly under way, led by the United States. The report said a soft economic landing remained likely, but warned that a cooling US housing market, especially, could be the catalyst to spark a sharper-than-expected downturn, and even a recession."

National Mortgage News. "Aegis Mortgage Corp., Houston, which said goodbye to its longtime chief executive last month, has closed two subprime operation centers, laying off an undisclosed number of workers."

From Origination News. "Fieldstone Investment Corp., Columbia, Md., a top-25-ranked nonprime lender, has put itself on the auction block, hiring Lehman Brothers as its adviser, according to investment banking officials. "There's definitely a book out on them," said one mergers-and-acquisitions adviser, requesting anonymity. Another investment banker confirmed this."

From Bloomberg. "U.S. foreclosures begun on adjustable-rate mortgages rose to a four-year high in the third quarter as borrowers struggled to pay higher interest rates."

"Surging home prices during the five-year real estate boom that ended last year spurred borrowers to choose riskier adjustable loans, many with rates that adjust annually, to afford real estate, said Doug Duncan, chief economist for the Mortgage Bankers Association."

"'You're seeing the early edges of the reset phenomenon in the adjustables, particularly in the sub-prime market,' Duncan said. In 2007, about $650 billion of U.S. home loans will reset at higher rates, he said."

The Washington Post. "About 16 times as many of these high-cost loans, known as subprime loans, are past due as in 1998, when the industry began tracking subprime statistics as part of its quarterly delinquency analysis."

"About 223,000 households with subprime loans lost their homes to foreclosure in the third quarter of 2006, and about 725,000 had missed payments, according to the quarterly survey from the MBA."

"About 12 1/2 percent of all subprime loans were delinquent in the third quarter, up from 11.7 percent in the second quarter, the Washington-based bankers association reported. 'It's almost certain that the number of delinquent subprime loans is higher than it has ever been,' said Duncan."

The Associated Press. "The Office of Federal Housing Enterprise Oversight instructed Fannie Mae and Freddie Mac Wednesday to tighten up underwriting practices for some nontraditional mortgages."

"According to OFHEO, the government-sponsored entities should follow guidelines issued by federal bank regulators in October that cover high-risk loans that allow borrowers to defer paying principal or interest for a certain period. Many of these loans come with adjustable mortgage rates. The popularity of these loans has ballooned in recent years."

From Inman News. "2006 was the year that some real estate forecasters had been predicting for several years. It was the end of the boom."

"'All of the sudden this seller's market had morphed into a buyer's market,' said Nicolas Retsinas, director of Harvard University's Joint Center for Housing Studies. The signs began to appear toward the end of 2005, he said, that the market was in transition. 'It seemed sudden at the time though all the signs were there before.'"

"Those signs, he said, included double-digit home-price appreciation, increasing investor interest and a rise in unconventional mortgage products that 'acted almost as a steroid on the residential sector.'"

"With the 'perfect vision of hindsight,' Retsinas said it is clear that the slowing began late in 2005. 'Everyone knew you couldn't sustain double-digit appreciation,' he said."

"Edward Leamer, director for the University of California, Los Angeles, Anderson Forecast, said, 'The big problem is the disconnect between prices and affordability.' The housing boom followed normal patterns until 2002, he also said, when there were 'five years of extraordinary appreciation.'"

"Investors pulled out of the market and consumers may have reacted as investors to changing market conditions, he noted. 'A lot of people, whether explicitly or implicitly, were thinking like investors.'"

"Kenneth Jenny, CEO and managing partner for (a) real estate consulting company, said the media may have had a role in the housing slowdown, and other real estate industry participants, too, have blamed the media for impacting consumer attitudes about housing. 'The influences that created this cycle are different than others, they aren't so much economic as they are media-driven.'"

"The media can act like a match starting a wildfire when it comes to consumer perception about real estate market conditions, Jenny added. 'Stopping it is really difficult. Whether it's true or not, it can turn the whole thing into a house of cards.'"