Some housing bubble news from Wall Street and Washington. "Standard Pacific Corp. said Thursday net new home orders for the first two months of the year fell 19 percent, hurt by weakness in Florida and Arizona, two of the markets hardest hit by the national housing slump. Standard Pacific used what it called aggressive pricing to wring a 40 percent increase in orders in California, another market where home prices have tanked and sales have slowed."

From MarketWatch. "Countrywide Financial Corp. was the subject of a report in Friday's Wall Street Journal that said the largest U.S. home mortgage lender saw a sharp increase in late payments in 2006."

"The WSJ said the company disclosed in a filing with the Securities and Exchange Commission that payments were at least 30 days late at the end of 2006 on 2.9% of prime home-equity loans Countrywide serviced, up from 1.6% a year earlier. In addition, payments were late on 19% of subprime mortgage loans at 2006's finish for Countrywide, up from 15.2% at the end of 2005, the paper said."

The Orange County Register. "Troubles keep piling up for mortgage lender New Century of Irvine. Today it announced that its 2006 annual report will be late because it hasn't yet been able to sort through the accounting errors it made in connection with bad loans. The company will ask the Securities and Exchange Commission for an extension."

"New Century Financial said it cut 300 jobs on Thursday, or about 4 percent of its work force, including 124 positions in Irvine, as the shakeup continues in the subprime industry."

"The company said it has not ruled out more job cuts. At least two analysts have said New Century could face a cash crunch if more than one investment bank stops funding and buying its loans."

The Associated Press. "The cratering of the subprime mortgage industry could present more than just a pothole for General Motors Corp."

"The world's largest auto maker disclosed Thursday that it will need more time to file its 2006 annual report with the Securities and Exchange Commission, marking the second year in a row the company has postponed the key filing."

"'We continue to believe GM equity is complacent about the potential impact of such subprime exposure,' Bear Stearns auto analyst Peter Nesvold wrote. He said the weakness at GMAC due to subprime problems is one of the key risks facing GM."

"At the end of the third quarter, ResCap, long viewed as the crown jewel in GMAC's businesses, held $57 billion of subprime mortgages for investment, or 77 percent of its total loans held for investment. Its exposure to 'residual interest' in mortgage securities, the high-yielding slices that suffer some of the first losses if loan defaults are higher than expected, was $1.4 billion as of Sept. 30."

From Bloomberg. "Goldman Sachs Group Inc., Merrill Lynch & Co. and Morgan Stanley, which earned a record $24.5 billion in 2006, suddenly have become so speculative that their own traders are valuing the three biggest securities firms as barely more creditworthy than junk bonds."

"'These guys have made a lot of money securitizing mortgages over the years in a mortgage boom time,' said analyst Richard Hofmann. 'The question now is what is the exposure to credit risk and what are the potential revenue headwinds if they're not able to keep that securitization machine humming along.'"

The Wall Street Journal. "The mortgage market has been roiled by a sharp increase in bad loans made to borrowers with weak credit. Now there are signs that the pain is spreading upward."

"A record $400 billion of these midlevel loans, which are known in the industry as 'Alt-A' mortgages, were originated last year, up from $85 billion in 2003, according to a trade publication. Alt-A loans accounted for roughly 16% of mortgage originations last year and subprime loans an additional 24%."

"Data from UBS AG show that the default rate for Alt-A mortgages has doubled in the past 14 months. 'The credit deterioration has been almost parallel to what's been happening in the subprime market,' says UBS mortgage analyst David Liu."

From Business Week. "Michael Youngblood, head of asset-backed securities research at Friedman, Billings, Ramsey Group, Va. points out that there was a sudden but little-noticed shift in lenders' strategy that occurred at the end of 2005: Lenders went from competing for customers on price (by lowering rates) to competing for customers on easy terms (by lowering lending standards)."

"Says Youngblood: 'The lack of overt changes in underwriting guidelines allowed the industry covertly to adjust its underwriting standards.'"

"'You had two choices: relax your standards or lose business,' says Robert Lacoursiere, a Banc of America Securities analyst. 'It was a giant game of chicken.'"

"Youngblood is disgusted by the whole thing: 'Basically the Keystone Kops were making loans,' he says. 'Or, to change the metaphor: Every time they see a sword they want to throw themselves on it.'"

The Christian Science Monitor. "'Wall Street wanted the mortgage brokers to keep making loans even though they were riskier and riskier,' says Ira Rheingold, executive director of the National Association of Consumer Advocates. 'They didn't care that ... people were getting loans they couldn't afford because there was so much money to be made.'"

"Housing advocates believe the regulators are reacting too late. 'They're good positive steps but it's not close to being enough, the genie's already out of the bottle,' says Mr. Rheingold."

From News 10. "Former employees of Folsom-based Central Pacific Mortgage are angry over the lack of warning before this week's sudden layoffs. As News10 first reported Tuesday, Central Pacific Mortgage and its Florida-based division Ivanhoe Mortgage abruptly closed their doors Monday saying they had no money to meet Wednesday's payroll."

"Insiders say the collapse can be blamed on a combination of earlier loans that had gone sour and an inability to sell high-risk new loans on the secondary mortgage market."

"A veteran Sacramento loan broker and past president of the California Association of Mortgage Brokers says the failure of Central Pacific Mortgage is just the 'tip of the iceberg' in the mortgage industry."

"'It's like a freight train coming at us full bore,' said Michael McGee of Winchester-McGee Financial. 'The type of risk that's been involved in the industry is far beyond anything I've ever seen.'"

"Federally-sponsored Freddie Mac, the second largest source of mortgage money in the United States, announced this week it would no longer purchase high-risk loans like those that helped push Central Pacific Mortgage into insolvency."

"Central Pacific Mortgage CEO John Courson serves on the board of directors for the Mortgage Bankers Association. One of Courson's former employees in the Northeast was sarcastic in an email message to News10."

"'I have two small children and now I have no money, no job and no health or dental benefits,' wrote the former employee. 'Let's give a nice BIG HAND to the MAN for all of his major accomplishments.'"

The Idaho Statesman. "Boise Cascade's 2006 earnings fell by more than 40 percent because of the downturn in the nation's housing market."

"Tom Stephens, Boise Cascade CEO, told investors there was an 'unprecedented' decline in the demand for building materials. 'During the third quarter it really kicked in, and when it did, it kicked in big time,' he said."