Some housing bubble reports from Wall Street. Bloomberg, "Mortgage Lenders Network USA Inc. stopped making new loans through its wholesale arm, becoming the third mortgage company in a month to curtail operations as housing sales slowed and defaults by borrowers rose."

"'The economics of this market are not good, and it deals with the performance of loans, and to a lesser extent the value of homes,' Executive Vice President James Pedrick said."

"Lenders including Ownit Mortgage Solutions Inc. and Sebring Capital Partners LP, which also specialize in 'sub-prime' mortgages, were among companies that closed operations and cut staff in 2006 as loans to high-risk customers soured."

"Nationwide, late payments on sub-prime loans rose during the third quarter to 12.56 percent of the total, the most since the first quarter of 2003, the U.S. Mortgage Bankers Association said."

"Closely held MLN is the 15th-biggest issuer of sub-prime mortgages, with $3.3 billion of loans in the third quarter, according to National Mortgage News."

The Hartford Courant. "Mortgage Lenders Network, currently building a sprawling new headquarters in Wallingford, said Tuesday that it is changing the focus of its business and will cut 100 jobs in Connecticut. In addition to the layoffs, Pedrick said 'a few hundred' workers, mostly outside Connecticut, would be furloughed for two weeks."

"In a letter to brokers Friday that was obtained by The Courant, Mortgage Lenders said its sources for funds for making loans through other brokers have dried up. 'Until we see credit quality and margins return to acceptable levels we have determined that MLN needs to pause' from outside broker originations, Mortgage Lenders' CEO, Mitchell Heffernan, said."

"Unlike competitors, Mortgage Lenders increased its lending last year. Lending conditions, however, have 'deteriorated dramatically' in the past two months, the company said Tuesday."

The Pittsburg Tribune Review. "National City Corp. eliminated about 50 mortgage loan jobs at Allegheny Center, North Side, on Tuesday, the first workday of the new year, informing employees as they showed up for work."

"The layoffs came after National City completed the $1.3 billion sale of its subprime mortgage business, First Franklin, of San Jose, Calif., to Merrill Lynch on Saturday. First Franklin originated about $18 billion in subprime loans, which are loans to homebuyers with financial problems, handled by National City."

"Not included in the deal was another National City unit at Allegheny Center, called Preferred Advantage, which also originated subprime loans. Because it was not included in the sale to Merrill Lynch, National City decided to close the unit Tuesday. As a result, National City cut 'less than 50' jobs, said spokesman William Eiler."

The LA Times. "When Ownit filed for Chapter 11 bankruptcy protection last week, its chief executive and sole director, William Dallas, expressed regret at how the company's destiny had spun out of his control."

"The private company, which made higher-cost mortgages for borrowers with imperfect credit scores and income gaps, relied on Wall Street to fund its loans, buy them and sell them off as securities. Last month, as defaults on the risky loans rose, the Wall Street firms seized millions of dollars of Ownit's capital to compensate for losses and then shut off the money spigot entirely, Dallas said."

"Ownit's demise is an example of wider troubles among independent sub-prime lenders, which, unlike more diversified banking companies, depend heavily on Wall Street for loans and services. 'This is going to end badly' for the industry, Dallas predicted."

"Ownit's most important partners, the ones that abandoned it, as Dallas sees things, were JPMorgan Chase, which provided cash to fund its loans, and Merrill Lynch, which supplied a major line of credit for Ownit and processed its loans into bonds for sale to investors."

"Issuance of sub-prime mortgage bonds jumped from less than $13 billion in 1995 to $594 billion in 2005, according to analyst Michael Youngblood at Friedman, Billings & Ramsey Inc., with a slight dip, to $521 billion, expected in 2006."

"Consultant David Olson said people were finally waking up to the risks of foolish credit practices that had enabled dodgy borrowers to repeatedly refinance using loans with artificially low starting payments, or to take out 'stated income' mortgages."

"Ownit specialized in 100% financing of home purchases to borrowers with low credit scores, often stretching the repayment time to 40 or 45 years. Analyst Matthew Howlett at Fox-Pitt, Kelton, noting that sub-prime loans made in 2006 were becoming delinquent at a near-record pace, said investors expected Ownit to be among the companies hardest hit by bad loans."

"Ownit had agreed that buyers of its loans could force it to repurchase the mortgages if borrowers began missing payments in the early months. The potential liability made it impossible for Dallas, a 30-year veteran of the industry, to sell his company. Dallas said that as a last resort, he and Ownit's majority owner, CIVC, offered to effectively give Ownit to Merrill Lynch if it would keep the lender in business."

"He said he was still not sure why that offer was rejected. 'I do not think this is the result they wanted,' Dallas said."

The Associated Press. "Shares of Lennar Corp. slipped after the homebuilder said it will post a loss in the fourth quarter on continued weakness in the housing market. The preannouncement is a blow to investors hoping the housing market is poised to recover from a slide that has lasted more than a year."

"The bulk of the loss will come from accounting charges totaling as much as $500 million to reduce the balance sheet value of land and options to acquire land. Excluding the charges, Lennar will still fall short of prior forecasts."

"Analysts said the charge to devalue land will be the biggest ever. A Wachovia analyst said he'd assumed $125 million in land devaluation charges, while Morgan Stanley analyst Robert Stevenson said the charge is twice the size he anticipated."

"Construction activity showed further weakness as spending on homes dropped for a record eighth consecutive month. The Commerce Department reported Wednesday that building activity edged down 0.2 percent in November. That followed declines of 0.3 percent in October and 0.8 percent in September."

"The weakness was led by a 1.6 percent plunge in home construction, which followed an even bigger 1.7 percent drop in October."

"The slump in housing has been a big drag on the overall economy, trimming 1.2 percentage points off growth in the July-September quarter, when the economy slowed to a lackluster 2 percent growth rate. The slump in October and November indicates housing will remain a serious drag in the final three months of the year."