Some housing bubble reports from Wall Street. "D.R. Horton Inc.'s sales orders for new homes fell 23% during the first quarter from a year earlier, the company said. The drop comes as home builders facing higher buyer cancellations in midst of a U.S. housing slowdown offer more inducements to sell houses."

"D.R. Horton also said its cancellation rate for the quarter was 33%, down from 40% in the fourth quarter. 'Although our cancellation rate decreased ... we continue to experience higher-than-normal cancellation rates and an increased use of sales incentives in many of our markets,' Chairman Donald Horton said."

"'The lower cancellation rate appears to have benefited from fewer last-minute cancellations,' wrote analyst Daniel Oppenheim, who had predicted an 18% order decline for the latest quarter. 'This may have been driven by increased flexibility to negotiate with buyers who had planned to cancel.'"

From MarketWatch. "Meritage Homes Corp. Tuesday said quarterly net sales orders fell 42% to 1,201 homes from a fourth-quarter record of 2,072 in the year-ago period. As a percentage of quarterly gross sales orders, cancellations rose to a record 48%, the residential builder said."

From Reuters. "Meritage expects to book pre-tax land and inventory charges of $55 million to $65 million in the fourth quarter."

"'We continue to actively renegotiate a number of option contracts that would enable us to move forward on projects that are no longer feasible at the land prices in the original contracts,' said CEO Steven J. Hilton. 'But when these negotiations are unsuccessful, we must sometimes make the difficult decision to forfeit the option deposit and leave the project. We plan to continue to operate cautiously until we are confident that housing demand is strengthening in our markets.'"

"In 2006, Brookfield Homes Corporation closed 1,159 homes and 834 lots for a total of 1,993 home and lot closings. This compares to a total of 2,824 home and lot closings in 2005. The company's backlog at December 31, 2006 was 247 homes, a decrease of 208 homes when compared to the same period last year. The targeted home closings for 2007 is between 1,150 and 1,250 homes."

"The company said net new home orders in its latest quarter rose 52 units from the previous year to 208 homes. Brookfield said the gain was driven by an increase in active selling communities."

"'While some might interpret this increase in orders might indicate a market rebound, in our view, it is more reflective of the company's aggressive discounting to close standing inventory and an easy comparison from a year ago,' JMP Securities said in a report to clients Tuesday."

"A worse-than-expected housing slump has left homebuilders with less cash flow to cover debt interest, and some ratings could be cut if that trend continues, Moody's Investors Service said. Some homebuilders, including some highly rated ones, have forecast interest coverage in 2007 that covers their covenant requirements by only a small cushion, Moody's said."

"Typically, homebuilders operate with negative cash flow during good years as they pay for high inventories, then turn cash flow positive in slowdowns as they reduce backlogs, start fewer homes and convert existing inventory to cash, Moody's said. 'However, this cyclical model seems to have run into a roadblock,' Moody's said, as rising cancellations keep the inventory of unsold homes high."

"Only six of the 19 builders that file public financial documents have turned cash flow positive, Moody's said. The cash flow squeeze has been exacerbated by builders' growing appetite for share repurchases, Moody's said. 'It may take some sizeable positive swings in cash flow accompanied by some significant debt repayments to avert some rating reductions,' the agency said."

"Shares of Novastar Financial Inc. fell after a JMP Securities analyst said mortgage loan delinquencies and foreclosures are rising as housing suffers. Analyst Jim J. Fowler painted a bleak portrait of what the weak housing market means for Kansas City, Mo.-based Novastar Financial, which lends money to home buyers with bad credit."

"During the run-up, lenders like Novastar Financial loosened their credit standards and devised creative ways to entice consumers with bad credit to borrow money to buy a house, Fowler said. Now, home prices have stopped rising as much and in some cases are falling as unsold homes remain on the market."

"This hurts Novastar Financial because low-income consumers will find it more difficult to pay off loans by borrowing against the value of their homes. That leaves Novastar Financial vulnerable to loan defaults. 'A cursory review of industry data would show that most especially the nonprime market is under siege from faltering credit,' Fowler said."

"Secured Funding of California has shuttered its wholesale division, which accounts for about one-third of its total production."

The Providence Journal. "About 75 Rhode Islanders have been left in financial limbo after Mortgage Lenders Network USA Inc, which is based in Middletown, Conn., backed out of nearly $38 million it had promised to borrowers or was considering, because of a downturn in Wall Street’s taste for sub-prime mortgages."

"'What you are finding is that as business got tougher last year, some lenders began to stretch their guidelines,' said Sam Garcia, publisher of an online newsletter. 'Some of those loans that they have made have started to default, and those that are buying these mortgages have started to pay attention.'"

"According to Rhode Island Department of Business Regulations Director Michael Marques...the fallout of Mortgage Lenders Network’s decision to halt its operations is the kind of episode one expects to see during a housing-market contraction."

"'They are doing $12 billion in mortgage volume and all of a sudden the music just stops,' Marques said. 'When it’s hot, nobody thinks it’s going to happen — and then delinquency rates increase and foreclosures go up, and the secondary market stops buying…. But there is no crystal ball, so there is no way you can predict when it’s going to happen.'"

The Union Tribune. "Late payments on credit card bills climbed in the summer to their highest point in a year, suggesting that some consumers are feeling financially squeezed. A factor influencing the rise in the third-quarter delinquency rate can be traced to the housing slump, said James Chessen, the association's chief economist.. With home prices either falling or not going up nearly as much as they had, some owners aren't feeling as wealthy."

"'With savings rates negative and home values stagnant, the spring has gone out of shock absorbers that handle life's financial bumps in the road,' Chessen observed."