Some housing bubble news from Wall Street and Washington. "Lennar Corp., the largest U.S. homebuilder by revenue, said earnings plummeted 73 percent during the fiscal first-quarter as the worst housing slump in more than a decade crushed demand. Lennar CEO Stuart Miller said the spring selling season, when homebuilders usually get the bulk of their orders, failed to materialize, just two months after telling investors this year would be as good or better than 2006."

"'Market conditions are very difficult across the Country,' Miller said. 'The industry is continuing to be challenged to adjust home prices and land values as well. It is unclear today where there is another shoe to drop.'"

"Gross profit margins on home sales fell to 15.6 percent in the quarter from 24.9 percent a year earlier because of higher sales incentives to lure potential customers."

"'The typically stronger spring selling season has not yet materialized,' said Stuart Miller, Lennar's president and chief executive. 'These soft market conditions have been exacerbated by the well-publicized problems in the subprime lending market.'"

"New home orders were down 27 percent year-over-year, to 7,132. Lennar said its cancellation rate was 29 percent."

"'Our sense is that the tougher lending environment would have only started at the end of the quarter so that the impact will be more significant next quarter,' analyst Daniel Oppenheim said."

From MarketWatch. "The U.S. Commerce Department reported Monday that sales of new one-family houses in February were at the lowest level since June 2000. Inventories of unsold homes rose to a 16-year high."

"William Wheaton, an economics professor at Massachusetts Institute of Technology, said the numbers 'are actually where they should be,' given that home sales over the past four to five years have been 'unusually high.'"

"'We simply don't need 1.2 million new homes sold a year,' he said. 'The real puzzle is how did we build so many homes for all those years without having the market tumble.'"

"U.S. home prices continued to fall in January, with prices in 10 major cities now down 0.7% year-over-year, according to Standard & Poor's and MacroMarkets LLC."

"The 10-city index is down 0.7% in the past year, the first year-over-year negative reading since 1996. The 20-city index is down 0.2% year-over-year. A year ago, prices were rising 15%."

From Reuters. "More than three in 10 U.S. homeowners have no idea what type of loan they own, according to a poll released by Bankrate.com, that suggested how confusion may be contributing to problems in the subprime mortgage sector."

"Another troubling finding in the Bankrate.com survey was that 34 percent of homeowners who hold adjustable-rate mortgages (ARM) do not know what they will do when their loan resets to higher interest rates."

"'Clearly, many homeowners are uninformed about their mortgages,' said Greg McBride, senior financial analyst at Bankrate.com. 'Given that homeowners could be looking at an increase of several hundred dollars each month, this is a staggering statistic.'"

"The Federal Reserve is concerned that borrowers of subprime mortgage loans may face 'more difficulty' in the next one to two years, a Fed official said Tuesday."

"In particular, those borrowers with recently originated adjustable-rate mortgages are likely to experience more delinquencies and foreclosures, said Sandra Braunstein, the director of the Fed's division of consumer and community affairs."

"'To be sure, there needs to be a return to more realistic underwriting standards, and the guidance should have that positive effect,' said Emory Rushton, senior deputy comptroller at the Office of the Comptroller of the Currency. 'But we cannot ignore the likelihood that tighter underwriting will mean fewer--and smaller--loans,' he said."

From Bloomberg. "Federal Deposit Insurance Corp. Chairman Sheila Bair urged Congress to pass legislation setting a national mortgage loan standard to protect borrowers from predatory lenders."

"A law should require loan underwriting based on the borrower's ability to repay the true cost of the loan and not just the 'artificially low' introductory rate, Bair said in prepared testimony before a House Financial Services subcommittee in Washington today."

"John Reich, the director of the Office of Thrift Supervision, disagreed with Bair, saying in his prepared remarks 'we do not see a need for legislation at this time.'"

"He urged states to adopt federal mortgage guidelines for state-regulated mortgage brokers and lenders outside the reach of federal bank regulators."

From CNN Money. "Sen. Christopher Dodd told CNNMoney.com that he did not believe new, restrictive regulation was necessary, but rather there was 'enough on the books' already."

"Dodd admitted that he did not know what sort of bailouts were realistic for as many as 2.2 million subprime borrowers at risk of default, but said that 'we need answers very quickly.' To that end, he said he planned to meet soon with Wall Street banks that buy the loans from mortgage lenders and repackage them into securities, as well as others, in order to come up with some solutions."

National Mortgage News. "On Thursday, members of the Senate Banking Committee lashed out at the Federal Reserve, and former chairman Alan Greenspan, for fueling the growth of alternative mortgage products and blaming the central bank for the rise in subprime-related delinquencies by not doing anything about deteriorating lending standards."

"In 2003, Mr. Andrea Mitchell touted AMPs, in particular ARMs, to consumers but a few weeks later clarified his statements."

"Of course, if senators on the committee knew anything about the mortgage industry they would realize that many of the biggest players in AMPs/subprime are non-depositories that are beyond the reach of the Fed and FDIC. The Senate panel might want to investigate Wall Street's role in the crisis but that might cast many of their largest donors in a bad light."

"This just in: HSBC Mortgage Services of Ft. Mill, N.C., is exiting the subprime correspondent channel."

The Central Penn Business Journal. "Fulton Financial Corp. said it would take a $5.5 million pre-tax charge to first-quarter earnings because one of its subsidiaries is being forced to buy back subprime mortgage loans that went awry."

"The loans did not require income verification and covered up to 100 percent of a home’s value for borrowers with a minimum credit score of 620."

From Fitch Ratings. "Fitch Ratings has placed NovaStar Mortgage, Inc.'s residential primary servicer rating for subprime product on Rating Watch Negative. NovaStar is a subsidiary of NovaStar Financial Inc."

"The rating watch reflects the challenging operating environment in the subprime mortgage market and uncertainties regarding NFI's profitability. As a result of the company's recent challenges, NFI's ability to fund its ongoing servicing operation and maintain servicing quality could come under pressure."

"Corporate recruiters fear home ownership may now prevent workers from accepting a new job, because selling a house may mean losing money. David Barlow said employers are now scrambling to upgrade their relocation policies to help workers sell their homes in a weak market. More of his clients are now offering to cover the costs of workers who lose money on a home sale."

"'It's an absolute nonstarter for a company to expect an employee to eat a fairly significant amount of money on a home sale,' Barlow said."

"John Challenger, head of employment outplacement firm Challenger, Gray & Christmas, said that while America's near-record 69 percent home ownership rate has been lauded by politicians, few considered the impact a less-flexible workforce could have on the economy."

"'When you're renting you're more fluid, but we've been moving more and more people into home ownership -- it's been a national goal. But there are problems with it,' Challenger said. 'The economy doesn't operate as efficiently, and that's what we're now beginning to see.'"

"Challenger said laid-off workers face a double whammy. 'People get stuck with homes now worth less than they were when they bought them, and they can't get out of them,' Challenger said."

"'Some can't even make the payments if they've lost their job, and they certainly can't take a $50,000 hit selling the house for less,' he said."