Some housing bubble reports from Wall Street and Washington. "Existing-home sales are expected to rise gradually in 2007 from current levels, with annual totals comparable to 2006, while new-home sales will continue to slide, according to the latest forecast by the National Association of Realtors."

"'Buyers, especially first-time buyers, with the combined benefits of seller flexibility and an unexpected drop in mortgage interest rates, have a window of opportunity. These conditions will persist in many areas until early spring when inventory supplies are likely to become more balanced,' said David Lereah, NAR's chief economist."

"'Prices in this buyer's market are temporarily a little below a year ago when we were in a strong seller's market,' Lereah said."

The New York Sun. "The economic ride in 2007 could be a lot bumpier than we've been led to believe. More and more potholes are starting to pop up, suggesting that talk of a next year's widely expected soft landing is becoming increasingly suspect."

"Merrill Lynch's North American economist, David Rosenberg, has just dispatched a disturbing commentary to clients in which he notes: 'It's getting harder to call it a soft landing.'"

"A Morgan Stanley economist, Richard Berner, also raises the danger that the soft landing scenario may be at risk. Income data, he says, depict a rapid deterioration in fourth-quarter economic growth, one that will likely extend into the first quarter. 'We need no convincing,' he adds, 'that the housing downturn still has a long way to go.'"

The Dallas Morning News. "A sharp downturn for the subprime mortgage business represents the latest sign of trouble in the teetering housing industry. 'The housing market is going down,' said David Liu, a mortgage analyst at UBS AG in New York. 'In a slower market, it's the weakest borrower and the weakest lender that are the first to go.'"

"The subprime skid claimed a local victim this month, when Carrollton-based Sebring Capital Partners LP said it was shuttering its operations. The failure eliminated 325 jobs, including 140 in North Texas."

"Some 5.7 million subprime mortgages were outstanding as of June, or 13 percent of the total tracked by the Mortgage Bankers Association. Subprime mortgages accounted for more than 2 percent of the total in 2000."

"Today, the U.S. homeownership rate stands at 69 percent. That compares with 65.1 percent at the end of 1995, according to the Census Bureau. The growth of subprime lending, fueled by new technologies and new mortgage products ­ could have accounted for as much as half of the increase, according to two economists at the Federal Reserve Bank of Chicago, Jonas Fisher and Saad Quayyum."

"'Subprime lending appears to be a very significant factor,' Mr. Fisher said."

"Many subprime mortgage lenders borrow money at short-term interest rates, lend it at long-term interest rates. Lately, however, that profit spread has been erased, as interest rates on benchmark 10-year U.S. Treasury notes have dipped below the rates for two-year Treasuries."

"'That has just killed subprime companies,' said Sam Garcia, publisher of MortgageDaily.com."

"Industry analysts said loan buybacks could have presented the Sebring with liabilities that outstripped its assets. Sebring Capital issued mortgages totaling $930 million last year, according to National Mortgage News. Sebring Capital issued mortgages worth $921 million in 2004, and $966 million in 2003."

From Paul Muolo at National Mortgage News. "The biggest story this past week, hands down, had to be the failure of OwnIt Mortgage, a subprime lender 20% owned by Merrill Lynch. Sources tell us that 60 days ago OwnIt auctioned off $20 million in defaulted paper (buybacks) at a price of 70. (Par is 100.) Recently, it tried to sell $70 million in bad paper."

"The bids, we're told, were under whelming. Merrill owns somewhere between 20% and 25% of OwnIt. One mortgage executive told us that some Merrill officials are calling its $100 million investment in OwnIt one of the worst investments the mortgage group has ever made."

From Reuters. "During the recent U.S. housing boom, mortgage lenders touted so-called exotic mortgages that allowed people to buy houses they could not otherwise afford. Now those lenders are bracing for the not-so-happy story of borrowers like Jesline Jean-Simon."

"The Miami woman bought her two-bedroom condo a year ago on a 3 percent adjustable rate mortgage with flexible payments. When home prices in the city were blasting off two years ago, Jean-Simon was sitting pretty."

"But now prices have eased and she works three jobs just to manage a mortgage that has ballooned into interest rates of around 10 percent. 'I don't sleep much,' the 35-year-old says about her round-the-clock work schedule. 'But the first thing that I pay is my mortgage because I don't want my credit to go bad.'"

"'One way or another, the industry is going to get a black eye,' said John Taylor, president of the National Community Reinvestment Coalition. 'There will be questions about tricks, fraud and whether these loans should have been made in the first place.'"

"But there is still a chance for lenders to take control of the issue, said Kurt Photenhauer, a top lobbyist for the Mortgage Bankers Association. 'I think that we can make a pretty convincing argument that we want people to stay in homes,' he said. 'We get no benefit from people defaulting.'"

"A mortgage survey (is) due on Wednesday. In a hint at Wednesday's data, October saw more foreclosure actions than any other month this year according to RealtyTrac."

"Still, he said, lawmakers might get pushed along by the coming headlines about defaults and people losing their homes. If Wednesday's data shows a serious uptick in delinquencies, he said, 'our arguments get harder.'"