The Daily Bulletin reports from California. "They may be locking the barn door after the horse has been stolen, but California lawmakers want everyone to know they're very unhappy about these risky mortgages that are starting to go bad. So Wednesday in Sacramento, the Senate Banking, Finance and Insurance Committee held hearings on less-than-traditional mortgages, including adjustable rates, interest only and sub-prime lending."

"It has become clear that many of those marginal buyers were banking strongly on a continued runup in the housing market. 'A lot of people got talked into loans they should not have taken,' said regional economist John Husing. 'Adjustable rates, big balloon payments, large jumps in interest rates. Housing was sold to them as an investment, and now some of them are losing their houses.'"

"Husing pointed out that whenever there is a period of 'speculative craziness,' people look at all the money being made and want to get in on it. 'A lot of people got into loans and didn't have a clue what they were really signing,' he said."

The Sacramento Bee. "People finally are coming to realize the pitfalls of crazy loans that allow them to borrow more money and buy more house than they can afford. It's easy to see why. Foreclosures are rising fast, as are notices of late mortgage payments."

"One key issue was not discussed at all at the hearing: the role of nontraditional mortgages in artificially driving up home prices, feeding the affordability crisis rather than abating it."

"One broker pleaded with senators not to do anything that might 'take away the dream of home ownership.' But as Paul Leonard of the Center for Responsible Lending testified, the issue is sustainable home ownership, not just the dream."

"If people can only afford initial low payments for a couple of years but then lose the home, how does that promote the dream of home ownership?"

The Press Democrat."Parts of the state are continuing to slump, the real estate industry's top economist in California predicted Thursday. Sonoma County will take longer to recover because of a recent exodus of jobs in the county, said Leslie Appleton-Young, chief economist for the California Association of Realtors."

"She forecast economic growth in California will be moderate in 2007, dragged down by the slumping housing market. 'Real estate is the Achilles' heel of the California economy,' Appleton-Young said."

"'People are spending more of their incomes,' she said. 'Budgets are stretched.' The result is a surge in foreclosure activity, which almost doubled in 2006. Lenders sent default notices to 913 Sonoma County homeowners who fell behind on their mortgages last year, up from 540 in 2005."

"Much of the foreclosure activity is concentrated among first-time buyers who purchased homes priced at the lower end of the market, said Michael Madsen, senior loan consultant with The Madsen-Shaw Home Loans Group."

"Appleton-Young agreed that foreclosures will continue to rise. But she predicted foreclosure rates will not reach the high levels of the early 1980s or mid-1990s when slumping economies and job losses roiled the state. 'We have a growing economy,' she said."

The Orange County Register. "A 'sudden and swift' decline in new-home demand caused profits for Standard Pacific Homesto plummet 72 percent in 2006, with the company racking up $98 million in losses during the final three months of the year, the Irvine homebuilder reported Thursday."

"'The sudden and swift decline in demand in most of the major housing markets across the country last year gave rise to significant price reductions and incentives to move inventory,' CEO Stephen Scarborough said in a company statement."

"Standard Pacific built 10,763 homes last year in eight states across the southern half of the nation, from Florida to California, the company reported."

"Last year was 'clearly a year of transition from the robust growth of the first half of this decade,' Scarborough said, adding that it's too early to predict when the housing market will improve. 'We believe many prospective homebuyers are waiting on the sidelines for signs of stabilized pricing,' he said."

From CBS 13.com. "It's hard to believe a house that’s only three-years-old has a cracked wall (that) makes it look like an ancient ruin. And the owners of this home won't go inside with us, because of worries about their health. What could cause this kind of dread and damage?"

"'The wind!' said Bill Thomas, a construction consultant living in El Dorado County. He says he's seeing that damage across El Dorado County."

"El Dorado Hills and much of the county below Lake Tahoe are zoned for what's called 'Wind Exposure B.' Thomas says exposure 'C' should be the standard here, but that would require stiffer materials and stronger design and drive up the cost of homes."

"'If it costs you $10,000 less to build it and you just built 400 homes in the subdivision, then now, you're talking about real money,' said Thomas."

"'The builders call it 'value engineering.' Before they start building homes, they get all their engineers together, and say, hey, how can we save money on these houses? Where could we, cut corners--if you want to look at it that way,' said Dave Crozier."

"The Crozier's two-year-old home is laced with cracks, like one running the entire length of the east-facing wall. And they have the loose windows, rust and mold. But there're other problems, problems not related to the wind. The Crozier home has a, rippling roof line, and anchor bolts that aren't secure enough to stabilize the house."

"Dave and Vickie Crozier paid more than $700,000 for their home on the edge of Stonebriar. They're now living with their two-kids in an apartment paid for by the builder."

"Bob Yeadon believes Thomas is onto something big, and he points to his former home as exhibit 'A.' 'Its one of those things where you work all your life, and you get, you know, your dream home,' said Yeadon."

"The Yeadon family moved out of their million-dollar home in the Serrano Country Club area on the advice of their doctors."

"When the family bought this home, brand new three and a half years ago, they paid just more than $800,000, and then put in $100,000 more in upgrades like this pool. They just sold this house. The highest bid they could get--$425,000."