Some housing bubble news from Wall Street and Washington. Bloomberg, "Freddie Mac, the second-largest source of money for U.S. home loans, reported a $550 million net loss for the third quarter and likely had similar results in the fourth quarter as lower interest rates reduced returns on its investments."

"Freddie Mac, which owns or guarantees about 20 percent of the $10.5 trillion U.S. residential mortgage market, hasn't released timely financial reports since revealing in 2003 that it understated net income to minimize earnings volatility."

"The company won't provide financial results for the first quarter of 2007 until the second half of the year, Freddie Mac President and COO Eugene McQuade said today. 'Sometime in the second half of this year, we expect we would be able to get back to quarterly reporting,' McQuade said."

"The third-quarter performance was attributable to $1.5 billion in pretax losses on derivatives and credit guarantee assets and obligations, Freddie Mac said. The results 'reflect the volatility we see quarter-to- quarter in response to movements in interest rates,' Freddie Mac CEO Richard Syron said in the statement. 'We face a challenging market environment.'"

From the Street.com. "The following are rumors I've picked up from trading desks and other industry sources this morning. More signs of an imbalance in the residential real estate market are appearing."

"For example, there's been a surge in vacant homes because of foreclosures, owners who bought another home and await sale of their first home, and homes that are for rent because they can't be sold. In certain regions of the country, such as California, vacant homes represent nearly 50% of annualized sales (triple the levels of four years ago)."

"A medium-sized private homebuilder and two more prominent subprime mortgage originators/servicers will shortly announce bankruptcy. HSBC is considering the sale of its Household Finance subsidiary because of the hemorrhaging of profits in its mortgage business."

The Associated Press. "James Pedrick, executive VP of Mortgage Lenders Network USA Inc., said the company is negotiating with several firms about possible partnerships 'that would allow us to reconsider our business model with the appropriate capital to support that.'"

"Pedrick blamed the company's problems on rising defaults and the faltering housing market. 'I don't think the market is going to turn around real fast,' Pedrick said. 'I think we're looking at 2007 being a tough year and beyond that it should improve.'"

"The company laid off workers Tuesday, although Pedrick called the actions two-week furloughs. He wouldn't say how many of the company's 1,300 workers were affected."

"Subprime borrowers had a delinquency rate of 12.5 percent in the third quarter of 2006, the highest in more than three years, the Mortgage Bankers Association reported last month. 'Basically, this industry has been doing terrible things for a long time,' said David Olson, president of a Columbia, Md.-based firm that tracks the mortgage industry. 'It threw all the lending standards in the garbage.'"

"He criticized the industry for lowering its standards by reducing the level of creditworthiness acceptable to borrow money and pursuing a sales-driven strategy."

"Michael Warshaw said he arranges about 80 loans a month, including four or five through Mortgage Lenders. Several loans that have closed have not been financed by MLN, he said. 'MLN is legally bound to produce the money and they can't,' Warshaw said. 'This has never happened before.'"

An editorial from the LA Times. "Buying a house with no money down was always sort of crazy, but the market is just now realizing it. The answer may be staring us right in the face. If you can't get a house with no money down, the sky is obviously falling."

"The problem for all these firms is that their market, people who want to own homes but have bad credit, little income, few savings or all of the above, is understandably at a much higher risk of default than the mortgage market as a whole."

"The sub-prime market's 45-fold growth, from $13 billion in 1995 to $594 billion in 2005, stands as a monument to the nation's home-buying mania. You'd need the proverbial heart of stone not to laugh at the suffering of the gamblers who bet that the real estate market could increase indefinitely."

"There's a puritanical impulse to say, 'If you can't afford a down payment, you shouldn't be buying a house.' But it may be more appropriate to marvel at a nation in which you can buy a house the way you'd buy a used car, and to thank the market's powers of natural selection that this behavior is now being curtailed."