Some housing bubble reports from Wall Street. "Countrywide Financial Corp. said the U.S. housing slowdown caused fourth-quarter profit to decline 3 percent, and projected 2007 earnings that fall short of most analysts' forecasts. The largest U.S. mortgage lender said it expects a 'challenging' 2007 as loan demand and margins fall and homeowners miss more payments."

"CEO Angelo Mozilo said 2007 'will likely be the trough year of the current housing cycle,' but that Countrywide may benefit as weaker lenders exit the market. He also said Countrywide has 'made progress' in plans announced in October to lay off more than 2,500 employees to help slash annual costs by more than $500 million."

From MarketWatch. "Looking to 2007, Countrywide said it expects continued pressure on margins as mortgage origination volumes decline. The Calabasas, Calif.-based company's also preparing for increased borrower delinquencies and continued credit deterioration. 'The company believes the industry will experience continued pressure on volumes, margins and housing prices, as well as increased defaults and foreclosures,' Countrywide said."

"The company missed its loan servicing target by about $200 million because of a residual write down of $74 million, higher than forecasted hedge losses of $44 million and steeper than forecast amortization expense (realization of cash flows) of $94 million."

The New Zealand Herald. "A town of less than 800 people is set to lose 99 jobs, after a sawmilling company announced yesterday it would close. The United States-owned mill focuses on producing housing materials for the American market."

"Mill site manager John Crane said the company's hand had been forced. 'It is just a fact that the market has caved in, in the States, and the higher dollar has translated to lower US dollar receipts,' he said."

The Associated Press. "Building supplies company USG Corp. said Monday an expected drop in new housing construction will dampen 2007 earnings. USG, which supplies homebuilders with gypsum wallboard, rode the housing boom that peaked in 2005 to big profits last year, but demand has eroded as the housing market remains flush with a glut of unsold inventory."

"'The drop in housing starts will further reduce wallboard demand from the near-record levels achieved in 2006,' the company said. 'It is too early to determine where demand levels will find a firm foundation or how our competitors will respond to the current imbalance between supply and demand.'"

"Subprime mortgage lender Fremont Investment and Loan on Monday said it severed ties last quarter with some 8,000 brokers whose loans were responsible for some of the highest delinquency rates in the industry."

"Such moves to improve loan quality have helped trim the number of early defaults on Fremont mortgages to a 3 percent rate from almost 6 percent in mid-2006, (said) Mike Koch, a Fremont VP. The so-called early payment defaults were close to 1 percent in 2005."

"The brokers 'released' were 'highly correlated' to the sudden rise in defaults on Fremont loans, he said in response to questions from investors."

"A surge in defaults across the industry from low levels in 2003-2005 came as subprime underwriters loosened standards to help maintain volume in a shrinking market. The loans, most destined for the $575 billion home-equity, asset-backed bond market, are being returned by investors at an alarming pace."

"Koch was reluctant to call the brokers 'bad' because some may have simply specialized in loans that Fremont has cut back on, such as eighty-twenty loans. However, some of the brokers were 'pushing appraisals' to make a home appear more valuable, he said."

From Broker Universe. "If there is one lesson that mortgage brokers can take away from the SourceMedia Mortgage Fraud Conference is that they will be under greater scrutiny from their wholesale investors in this area. Part of this is just a natural consequence of the numbers."

"Fraud losses topped $1 billion in 2005, noted Jeffrey Taylor, the managing director of Digital Risk LLC. He quoted data from the Federal Bureau of Investigation, which showed 80% involves collusion by industry insiders."

"A pair of panels encouraged mortgage lenders to go after parties through the legal system to recover monetary damages for mortgage fraud."

"There are a number of potential legal causes for lenders to go after any third party in the transaction, including unjust enrichment, said Bob Simpson, the president of IMARC. 'If you are not doing anything to recover that loss, you are letting them get away with it,' he said."

"The number of vacant homes waiting to be sold surged 34% to 2.1 million at the end of 2006 compared with the end of 2005, by far the fastest increase ever recorded, the Census Bureau reported Monday."

"A year ago, 1.57 million homes were vacant and awaiting a sale. The vacancy rate for owned units jumped to a record 2.7% from 2.0% a year earlier. From 1965 to 2005, the homeowner vacancy rate had never been above 2%. The long-term average is 1.4%."

"'We have more than a million housing units of excess supply,' said James O'Sullivan, an economist for UBS. 'If you are looking for evidence that the worst is over for housing, you're not going to find it in this report. This argues that housing starts need to go down more.'"

"Home-price appreciation weakened to its slowest pace in more than 10 years in the 12 months ending in November, MacroMarkets and Standard & Poor's reported Tuesday. Home prices fell in 17 of 20 cities in November compared with October."

"The last time prices were rising so slowly was in late 1996, at the end of a six-year period of flat or falling prices. A year ago, home prices were rising about 16% year-over year."

"'Countrywide, home-price declines appear to show no signs of slowing down,' said Robert Shiller, chief economist for MacroMarkets, in a press release."