Some housing bubble news from Wall Street and Washington. "Builder confidence in the market for new single-family homes receded in March, largely on concerns about deepening problems in the subprime mortgage arena, according to the National Association of Home Builders/Wells Fargo Housing Market Index, released today. After rising fairly steadily since its recent low last September, the HMI declined three points from a downwardly revised 39 reading in February to 36 in March."

"'Builders are uncertain about the consequences of tightening mortgage lending standards for their home sales down the line, and some are already seeing effects of the subprime shakeout on current sales activity,' said NAHB Chief Economist David Seiders."

From Bloomberg. "'We're seeing a second wave of negativity hitting the builders as the subprime mess starts to constrict credit to potential homebuyers,'' said economist Christopher Low. 'We're not getting a bounce in sales that would lead to a recovery in housing starts.'"

The Associated Press. "Technical Olympic USA Inc., a homebuilder, said Monday it swung to a fourth-quarter loss, hurt primarily by charges related to a joint venture, but also by a declining housing market."

From CNN Money. "About 1.1 million additional home foreclosures are expected over the next six years as adjustable-rate mortgages - which made home buying more affordable to U.S. buyers in recent years - reset to higher payments, according to a study by research firm First American CoreLogic."

"The expected $112 billion in losses won't break the mortgage industry but will inflict pain on lenders and borrowers affected by the defaults, said the study, released Monday."

"The percentage of loans resetting with negative equity is expected to leap from 12.9 percent in 2007 to 24.4 percent in 2008. That's when some of the most frequently used 2/28 mortgages and 3/27 mortgages are scheduled to reset."

"Subprime mortgages have been generating a lot of attention, and worry, among investors, economists and regulators, but those loans may be only part of the threat posed to the housing market by risky lending. Some experts in the field are now concerned about the so-called Alt."

"Standard & Poor's estimates that the Alt. A market has gone from less than $20 billion in loans in the fourth quarter of 2003 to more than $100 billion in each of the last three quarters. Overall, new Alt. A loans totaled $386 billion in 2006, according S&P's estimates - up 28 percent from 2005."

"By comparison, subprime loans reached $640 billion in 2006, according to trade publication Inside Mortgage Finance."

"Mitch Ohlbaum, president of mortgage broker Legend Mortgage whose business was about 55 percent Alt. A, said he's seen a dramatic change in the business the last few years, and its now swinging back away from the loans."

"'All that nutty stuff is going to disappear,' said Ohlbaum. 'Everyone today is shying away from the 100 percent of value loan. But anytime there's a big change in the market like there is now, everyone will overcompensate for a while. I think this will last for 12 to 14 months before things are back to normal, and I think you'll see more foreclosures, more people in trouble in the meantime.'"

From Reuters. "U.S. financial markets are likely to experience some fall-out from the subprime mortgage lending woes but they are likely to be limited, the chief investment officer at the biggest U.S. pension told Reuters on Monday."

"The subprime sector 'is an important weakness in the economy and it is likely that there will be a measured impact in other sectors. And there is likely to be some contagion,' said Russell Read of Calpers, which invests about $232 billion for California state workers."

From Fortune. "Amid the chaos of the escalating subprime mortgage crisis, the three major credit-rating agencies, Fitch, Moody's and Standard & Poor's, have been voices of calm. But what if they're wrong? It's not just their reputations, already tarnished by their failure to give investors timely warning of the Enron or WorldCom implosions, that are at stake, but possibly the housing market itself."

"Critics have their doubts. A paper co-authored by Rosner and Joseph Mason, a visiting scholar at the FDIC, argues that if home prices depreciate, even investment-grade CDOs will suffer 'significant losses.'"

"Janet Tavakoli, who runs Tavakoli Structured Finance, points out that AA-rated tranches of CDOs backed by subprime mortgage paper now yield far more than AA-rated debt backed by other assets - a sign that the market doesn't trust the ratings."

"'No one believes the ratings have any value,' she says. Opined Grant's Interest Rate Observer: 'We are willing to bet that the agencies assigned too little weight to greed, ignorance, and soft criminality."

The LA Times. "Relatively few of the CDOs sold in recent years have been downgraded. 'No one can say we're not aware of the risks,' said Kevin Kendra, an analyst at rating firm Derivative Fitch. 'It just hasn't materialized yet' in the structure of CDOs, he said."

"Yet many analysts say the market prices of the diciest mortgage bonds, those backed by so-called sub-prime loans, indicate that still-rosy CDO ratings aren't reflecting reality."

"Some mortgage bonds rated BBB, the lowest investment-grade rating, 'are going to see real losses of principal soon,' predicted Janet Tavakoli."

"Risk premiums on investment-grade corporate bonds are at their highest level in more than three months on concern rising delinquencies by subprime borrowers will slow the U.S. economy."

"'This period of volatility is likely to continue as long as there is divided opinion about the magnitude and resulting financial impact of the subprime problem,' said Edward Marrinan, head of North American credit strategy at JPMorgan Chase & Co. in New York. 'Subprime risks and accompanying fears of a spillover into the broader consumer sector are the catalysts for the heightened volatility currently exhibited by all risky asset classes,' he said."

"Fremont General Corp., the California thrift trying to sell its home-lending business, told the unit's staff they may be dismissed in two months."

"Shares of subprime lender Accredited Home Lenders Holding Co. fell on Monday after the company said it still had not landed a financing deal to boost its liquidity."

"New Century Financial Corp. said Monday it has received cease-and-desist orders from more states, restraining the company from taking new applications for mortgage loans."

National Mortgage News. "What exactly are criminal investigators looking at in regard to New Century Financial? One source familiar with these matters said investigators are focusing on some of its loan trades."

"'Typically, they would do a trade before the quarter's end,' he said. The key to such trades, the source noted, is 'counter-party' risk. Counter-party risk means there's a company on the other side of the trade, typically, an investment banking firm."

"Another item being looked at is how much cash New Century said it had on its balance sheet. What New Century said it had, and what it really had, is a whole different matter."

"In case you missed it: What's the going price for delinquent second liens in the secondary market? Answer: 15 cents to 25 cents on the dollar."