Some housing bubble reports from Wall Street and Washington. "Pulte Homes Inc., the fourth- largest U.S. homebuilder, said the housing market is unlikely to have a quick recovery as buyers wait out the drop in prices. 'We're not projecting anything to bounce off the bottom at this point,' CFO Roger Cregg said at a UBS conference in London. 'There's been a lot of buyers that have moved to the sidelines.'"

"'We don't think it's repeatable,' Cregg said of the high profit and sales of 2004 and 2005 for builders."

From MarketWatch. "Cregg, when asked about the prospect for M&A activity this year, said given the uncertainty in the housing market, 'valuations are questionable during a time like this.' Since it's unclear how much land on the balance sheets will be impaired, there's a feeling that 'maybe you shouldn't do anything here.'"

From Bloomberg. "MGIC Investment Corp., the largest U.S. mortgage insurer, was the top gainer in the Standard & Poor's 500 index on Feb. 6, the day it agreed to buy No. 3 mortgage insurer Radian Group Inc. for $4.9 billion."

"In the five weeks since, it has become the 10th-worst S&P performer."

"'There's investor fear that credit quality in mortgages is deteriorating,' said Mark Patterson, a managing director at NWQ Investment Management Co. L.L.C., of Los Angeles. It was the largest shareholder of Radian and second-biggest investor in MGIC as of December."

"'A number of subprime lenders had eased underwriting standards considerably, but there's scant evidence that's going to affect the mortgage insurance industry,' said Patterson at NWQ Investment. 'What matters is the economy: Do people have jobs? And those issues are fine.'"

From Reuters. "Some with connections to the mortgage industry (see) job losses ahead. That was potentially good news for recruiters with the right clients, said head hunter Jimmy Donaldson, who said his firm was getting interest from mortgage professionals looking to switch industries."

"'Everybody's going down, not just New Century,' he opined."

"'I didn't know they had problems. I'm just grateful I didn't have stock,' said a woman who read about New Century in the morning paper and was concerned for people inside the company as well as investors and borrowers. She said her name was Donnie Lynch. 'Lynch like hanging. Like what they might do there,' she added, gesturing at New Century's low glass tower."

"New Century Financial Corp., the largest independent U.S. subprime mortgage lender, said yesterday that Barclays PLC has demanded that it immediately buy back about $900 million (U.S.) of mortgage loans."

"On Monday, New Century said it had less than $60 million of cash on hand. It has said lenders might force it to repay more than $8 billion it doesn't have."

The Associated Press. "Financial services company National City Corp. on Wednesday said it has not been able to sell some $1.6 billion in nonconforming loans amid a downturn in the market for mortgage loans made to borrowers who do not qualify for conventional loans."

"The company has written down the fair value of those loans by $11 million through February and said further write-downs are likely."

The Orange County Register. "Impac Mortgage Holdings, an Irvine-based investor in mortgages, said Wednesday the percentage of late payers in its portfolio doubled last year, raising concern that a lending crisis that began with subprime borrowers may be expanding to those with better credit profiles."

"Borrowers who missed at least two monthly payments accounted for 6.2 percent of Impac's mortgage holdings Dec. 31, up from 3.1 percent a year earlier. That translates to $1.36 billion in problematic loans, nearly double the year-ago figure."

"New sales of collateralized debt obligations (CDOs) have surged 90 percent in the first two months of 2007, compared with the year-earlier period, some of which may be due to managers rushing to get some deals to market in February because of weakness in subprime mortgages."

"'We have heard of some CDO warehouses liquidating and/or taking mark-to-market losses in transactions in their ramp-up phase,' Morgan Stanley analysts wrote."

"Lawyers for investors hurt by the meltdown of mortgage lenders that cater to risky borrowers are likely to file a wave of class-action lawsuits against the lenders and possibly their auditors and bankers as well."

"Gerald Silk, a partner at plaintiffs' firm Bernstein Litowitz Berger & Grossmann LLP in New York, said investors will probably zero in on the companies' internal controls and whether there were deliberate misstatements in their financial filings. Under the 2002 Sarbanes-Oxley corporate reform law, top corporate officers must certify financial statements."

"'There is no question that there are lots of bells and red flags as to where were the third parties and what was their role in this,' he said. 'What about the auditors? What about the banks. These are questions that the investors that bring these cases are going to have to really work hard to figure out.'"

"'We are considering litigation, no question,' he said. 'We have already had numerous discussions with some very, very large pension systems throughout the country on this.'"

"House prices could tumble 10% this year and force the United States into recession if a credit crunch taking shape in the mortgage market gathers steam, Merrill Lynch said in research notes this week."

"Merrill said the biggest concern is that tighter lending standards in the mortgage market, even if confined to lower-quality borrowers, will constrain overall housing demand and hamper recovery in the struggling housing market."

"'It is not inconceivable (given what is happening now to mortgage originations) that we end up with something closer to a 10% decline in home prices this year,' Merrill Lynch said."

From CNN Money. "Ohio's attorney general joined officials from other states, barring troubled subprime mortgage lender New Century Financial Corp. from operating in the state."

"'If nothing else, this debacle underscores the need for us to drive New Century and unscrupulous operators out of our state once and for all,' said Attorney General Marc Danny. 'And we are also demanding that this company be held accountable for all its misdeeds,' he said."

"Earlier this week, regulators in Massachusetts, New York, New Jersey and New Hampshire issued cease-and-desist orders against the subprime lender, barring it from taking new loans in their states."

"U.S. Senate Banking Committee Chairman Christopher Dodd said on Wednesday regulators bear some responsibility for problems in the subprime mortgage sector and he plans to call them before the committee for questioning."

"'That's what's made me angry here -- that the regulators apparently have not been doing as good a job as I think they should have been doing,' Dodd told reporters. 'But we'll know the answer to that question as we bring them before the committee,' he said."

"The goverment is preparing to punish some subprime mortgage lenders under investigation for discriminatory practices. Rep. Carolyn Maloney of New York, a committee member, is proposing legislation that would impose restrictions on banks and other mortgage lenders."

"They would be required, for example, to evaluate a borrower's ability to repay an adjustable-rate mortgage over the entire term of the loan, not just at the start, when much lower rates are in effect."

From Peter Schiff. "Those who believe that the subprime market is unrelated to the broader economy do not understand that...it's just that the subprime sector, being one of the most vulnerable spots, is where the problems are first surfacing."

"The bottom line is that far too many Americans, not simply those with low credit scores, have borrowed more money than they are realistically capable of repaying."

"The fix now being suggested by some members of the U.S. Congress demonstrates how Washington completely misunderstands market dynamics. Washington fails to grasp that a return to traditional lending standards would precipitate a return to traditional prices, which are way below current levels."

"However, continuing to look the other way is no panacea either, as the real estate market is already in the process of collapsing under its own weight."

"It is also typical and very disingenuous for lawmakers to feign outrage and to have waited until a collapse has occurred before taking action. Had the government taken preemptive action with regard to mortgage lending, the real estate bubble never would have inflated to the degree that it has."

"The main risk is that Ben Bernanke and his buddies at the Fed panic, producing something far worse. Let's hope that cooler heads prevail."