Some housing bubble news from Wall Street and Washington. "Total existing-home sales were 4.3 percent below the 6.75 million-unit level in January 2006. Total housing inventory levels rose 2.9 percent at the end of January to 3.55 million existing homes available for sale"

"Median home prices fell for a sixth straight month. The January decline was the third-biggest drop in history."

"'For the last several months I have been hemming and hawing on whether we have reached bottom,' said David Lereah, chief economist for the Realtors. He said that the January report was an encouraging sign that the bottom for sales activity was reached last September."

"But he cautioned that the warm weather in December boosted home closing in January, the activity that is tracked in the Realtors report. He said there could be a bit of a payback in coming months."

"Prices of single-family homes across the nation were flat in December, the worst results since slight price declines seen in early 1996, a housing index released Tuesday by Standard & Poor's showed."

"S&P index committee chairman, David Blitzer, compared the decline to that of the early 1990s but said this one could be even more pronounced. 'By most measures, the current slide is steeper,' he said. 'It could outdo the 1989, '90, '91 event. I don't see any signs that we've hit bottom and are about to turn up,' Blitzer said."

From MarketWatch. "Government-sponsored mortgage marketer Freddie Mac is the latest company to weigh in on the growing concern over lending to unqualified homebuyers, saying Tuesday it's tightening its standards for buying mortgages held by such borrowers."

"Freddie Mac said Tuesday that it would stop buying those mortgages that have 'a high likelihood of excessive payment shock and possible foreclosure.' Freddie Mac also said it would limit the use of loans that don't require income verification or other documentation, and will recommend that lenders collect adequate escrow for taxes and insurance payments."

"The firm said its new requirements cover mortgages known as 2/28 and 3/27 hybrid ARMs, which currently make up about three-quarters of the subprime market. Specifically, Freddie Mac said it will require that borrowers applying for these products be underwritten at the fully indexed and amortizing rate, as opposed to the initial 'teaser' rate."

"The company also will limit use of low-documentation loans, so-called 'no income verification' products in combination with the 2/28 and 3/27 hybrid arms. In addition, the company won't purchase 'no income, no asset' documentation loans and will limit so-called 'stated income, stated assets' products to borrowers whose incomes derive from hard-to-verify sources, the firm said in a press release."

"'There will be a reasonableness standard for stated incomes,' Freddie Mac concluded."

The Wall Street Journal. "David Radley wants to borrow $180,000 to buy a house he rents in Appleton, Wis., but he can't afford a down payment and has a low credit score."

"Finding such a loan was a snap until recently. Now mortgage broker John Waite says Radley needs to pay off old bills and put down at least 5 percent to qualify. Though Waite's motto is, 'We say yes' when the banks say 'no,' 'he is saying 'later' more frequently these days."

"Investors' loss of confidence is reordering the mortgage business. 'A lot of loan programs that have been available for the past several years ... are going away,' says Jack Pevey, president of Integrated Mortgage Services Inc. in Denver. 'It's going to keep a lot of people out' of the market."

"No-money-down loans to borrowers with low credit scores 'are going to be a thing of the past real soon,' says Bob Moulton, president of Americana Mortgage Group."

"'We're probably reverting back to guidelines that were in place' four years ago, NovaStar President Lance Anderson says. The new guidelines wouldn't have allowed as many as 25 percent of last year's loans without more documentation or bigger down payments, he added."

The Financial Times. "Repayment problems involving 'subprime' US mortgage borrowers could have knock-on effects in the broader $8,000bn mortgage market and beyond."

"The latest concerns centre on the Alt-A market, in which consumers with slightly better credit than the weakest subprime borrowers can obtain loans with loose terms - such as no proof of income. Late payments and defaults on such loans are running at four times the historical rate."

"'The delinquency numbers for the 2006 Alt-A originations are materially worse than a lot of people would have expected,' said Charles Sorrentino, mortgage analyst at Merrill Lynch."

From Inman News. "The Wall Street end of the mortgage business is entering an episode of distress at this moment, and we will see pricing and availability do some strange things in the next week or two."

"The party most vulnerable to the retreat of housing exuberance is not housing, it's the mortgage profiteers, at this moment the Wall Street co-dependents even more so than their Main Street lender-accomplices. As of Friday there are not enough buyers of subprime risk to cover loans recently closed or in process."

"Trash, like other things, rolls downhill: Alt-A loans are closer to junk than trash, but high loan-to-value-ratio Alt-A loans are still trash."

From theStreet.com. "Alt-A loans include option adjustable-rate mortgages, negative amortization loans and other nontraditional loans. These loans are made to homebuyers whose credit is generally better than that of subprime borrowers but worse than that of prime borrowers, on the basis of FICO credit-quality scores."

"'Everyone says these problems are contained in subprime,' said Carl Tash, a portfolio manager of a long/short real estate securities hedge fund. 'If you think about it logically, what is the difference [between subprime and Alt-A] ? Some arbitrary difference in FICO scores.'"

From USA Today. "Former Federal Reserve Chairman Alan Greenspan said Monday it is 'possible' the U.S. economy might fall into recession by the end of the year."

"Greenspan also said he has seen no economic spillover effects from the slowdown in the U.S. housing market. 'We are now well into the contraction period and so far we have not had any major, significant spillover effects on the American economy from the contraction in housing,' he said."

From Bloomberg. "Federal Reserve Chairman Ben S. Bernanke during his semi- annual monetary policy report to Congress said there are 'tentative' signs of stabilization in housing, and the slowdown hasn't hurt other sectors of the economy to 'any significant extent.'"

"Still, it is 'too early to say this problem is over,' Bernanke said. 'Even if housing demand falls no further, weakness in residential investment is likely to continue to weigh on economic growth over the next few quarters.'"

"New orders for U.S.-made durable goods plunged 7.8% in January as nearly every category of manufactured goods declined, the Commerce Department reported Tuesday. This is the third drop in the past four months and the sharpest decline since July 2005."

"'With capital spending having been down in the fourth quarter, this trend is not something that makes one comfortable about the strength of the economy,' said economist Joel Naroff. Economist Ian Shepherdson went so far as to say the factory rector was in a 'recession.'"

The Globe & Mail. "For decades, the U.S. Congress and a string of presidents have struggled to make the dream of home ownership a reality for more Americans. Prodded by Congress, regulators operated on the principle that more mortgage cash couldn't possibly be a bad thing. Bad credit history? No down payment? No problem."

"Susan Wachter, a real estate professor at the University of Pennsylvania's Wharton School of Business, estimates nearly two-thirds of all home loans since 2003 have been 'aggressive.' But all this easy money hasn't been without consequence."

"Fannie Mae and Freddie Mac have seen a host of new players come into the market, offering big returns and steep risks. These subprime securities have become popular with the hedge funds, which are unregulated. No one knows with any certainty where all these subprime securities are stashed away."

"Whatever happens, Washington's fingerprints are all over this. It is, after all, exactly what they wanted."