Some housing bubble reports from Wall Street and Washington. MarketWatch, "Pulte Homes Inc. warned it may post a fourth-quarter loss but said it would make an aggressive effort to strengthen its balance sheet by taking charges to reduce its land inventory."

"Pulte 'continues to navigate through a challenging operating environment, with demand for new homes during the fourth quarter still far below pre-2006 levels,' CEO Richard Dugas said in a statement, throwing cold water on hopes that housing has bottomed."

"The company also raised its estimate of the amount of land charges it expects to record for the quarter. It now anticipates land-inventory impairments and other charges such as options deposits will range $330 million to $350 million. Its earlier estimate was $150 million."

"'With our ongoing focus on the balance sheet, we continue to evaluate land positions, renegotiate contracts and, if necessary, forfeit deposits and pre-acquisition costs,' CFO Officer Roger Cregg said."

"Banc of America's Daniel Oppenheim said Pulte's increased land-charge estimate 'reflects [a] recent price decline and also a shift in pricing strategy to reduce its speculative homes. We think it may be difficult for home builders to resist the temptation of starting construction in February and March in order to meet 2007 delivery goals,' he added."

"Homebuyers have been backing out of sales contracts and forfeiting their down payments during the housing slowdown. Hovnanian CEO Ara Hovnanian said many cancellations are for older contracts signed when the market was booming and home prices were rising. He said one way the company is avoiding cancellations is to negotiate with buyers at the closing table."

"'We don't like to do it, but it can prevent cancellations,' Hovnanian said."

"When asked to pick an indicator he's looking at to spot a potential bottom for housing, Hovnanian said 'we're watching [home] resale listings, which is something we never used to focus on.'"

"Toll Brothers Chief Financial Officer Joel Rassman said buyers are putting off home purchases because they think the house may end up being cheaper soon. 'There was no [spring] selling season last year, and if it happens again a lot of the smaller private builders won't be around the next selling season,' he said."

From Origination News. "The net income of Washington Mutual Inc.'s home loan segment plummeted by more than $1 billion last year, the Seattle-based thrift has reported. Originations of home loans declined 22% for the year. WaMu attributed the nosedive in the mortgage segment's profits to 'the continued slowing of the housing market and a significant weakening of overall subprime market conditions.'"

"The company said higher delinquencies on subprime home loans and weaker market conditions shaved $160 million from its pretax earnings in the fourth quarter."

"Housing markets continue to soften in December and demand for residential mortgages continued to weaken, according to a Federal Reserve report called the Beige Book. 'Nearly all [Federal Reserve Bank] districts reported a continued softening of housing markets, and high inventories of new homes have generally led to slowing in residential building,' the Beige Book says."

"In the San Francisco district (where homes are still appreciating), Realtors 'are offering significant incentives to sell properties,' the Beige Book says."

"Fannie Mae saw a loss in the third quarter of 2006 on a GAAP basis, said James Lockhart, director of the Office of Federal Housing Enterprise Oversight, which regulates the safety and soundness of company. Analyst Jim Vogel predicted the loss to be around $400 million, based on OFHEO's capital classification released Dec. 28."

"Negotiations for new legislation are ongoing. One of the remaining sticking points has been whether the new law would allow Fannie Mae and Freddie Mac to purchase mortgages above the 'conforming loan limit' established for the rest of the country."

"The existing conforming loan limit is $417,000. Lockhart said any legislative changes would likely affect 10 or 11 markets, concentrated in parts of California and some suburbs of New York City. 'Certainly there is an argument that can be made that providing mortgages over $417,000 is well away from the affordable housing mission' of both companies, Lockhart said."

The Associated Press. "'They unfortunately have very, very large problems,' Lockhart said in a meeting with reporters, referring to the government-sponsored companies that are the two biggest financiers in the $8 trillion home-mortgage market in the United States. 'They have a long way to go; there are still significant worries.'"

"The problems 'are massive and they're ongoing,' he said. 'We have to prevent these companies from growing out of control again,' Lockhart said."

The Daily Star. "Although the correction in the nation's homebuilding industry will continue, it won't be enough to stunt a strong U.S. economy, Susan Bies, a Federal Reserve System governor, said in a speech here Thursday."

"The nation's housing correction was 'badly needed,' she said. Nationally, while less then 10 percent of homes are usually bought by speculators, during the run-up that figure increased to up to 40 percent in some areas."

"Bies encouraged people to become better-educated about mortgage options and cautioned an auditorium full of future home buyers about the pitfalls of sub-prime loans, such as interest-only mortgages and those with no down payments."

"'I don't want to make you all scared of doing mortgages. They're wonderful. They work most of the time,' Bies said."