Some housing bubble news from Wall Street and Washington. "As troubles continue to roil the market for subprime mortgages, New Century Financial Corp. says that it's technically in default with several lenders and is under investigation by federal regulators. Analysts cautioned it could spell the end of the Irvine, Calif.-based company, the second-largest player in the subprime industry."

"'New disclosure about additional shareholder lawsuits and a criminal investigation by the U.S. Attorney's office likely reduces the likelihood that a rescue-buyer/liquidity provider will step in to bail the company out,' Bear Stearns analysts wrote Monday morning."

From Reuters. "New Century Financial Inc. shares fell more than 60 percent in early Monday trading. 'We think there is further downside risk, possibly to $0,' wrote Merrill Lynch & Co. analyst Kenneth Bruce. 'Bankruptcy seems a likely course of action.'"

"New Century said its survival may be in question if it doesn't obtain waivers from lenders. It said it is not in compliance with 16 financing agreements totaling $17.4 billion because it didn't file its annual report on time. It also said just six of 11 lenders have waived a requirement that it be profitable for two straight quarters."

From MarketWatch. "'New Century is more likely to enter the death spiral we had feared, as filing delays, financial difficulties, likely restricted liquidity and regulatory/criminal investigations could conspire to limit its options outside of bankruptcy,' Merrill Lynch analysts wrote early Monday."

"Analysts at Stifel Nicolaus cut their ratings on shares of several mortgage lenders Monday as more bad news hit the troubled market for subprime mortgages. Aside from New Century's woes, Fremont General Corp.'s stock plunged after the company said it plans to sell its subprime lending business after it received a proposed cease-and-desist order from the Federal Deposit Insurance Corporation."

"'Despite valuations that are well below book value, we see increasing evidence that this industry is now in a downward spiral whereby each negative development fuels additional deterioration in key fundamentals including origination volume, pricing, credit -- and most importantly -- funding,' Stifel Nicolaus said."

"'With housing prices now falling nationwide ... and almost daily evidence that the industry stressed underwriting too far, just how high delinquencies and losses go is very much unknown at this point, largely due to increased prospects for falling housing prices,' the analysts wrote."

"'As credit deteriorates further, we expect underwriting to tighten even more and secondary market demand to remain volatile,' they added."

"Countrywide Financial Corp. fell 3% after Lehman Brothers downgraded the mortgage giant to equal weight from overweight on jitters in the subprime mortgage business. 'Even the best operators can get pulled under by a strong undertow,' analyst Bruce Harting said."

From Bloomberg. "'The rapid high-profile demise of the pure-play subprime lending industry has caused major, real dislocations in the market that should negatively impact the prime-oriented lenders' earnings over the course of 2007,' Harting wrote today. 'Prime loans will see rising default rates as subprime has, due to increasingly weak underwriting in recent vintages.'"

"Shares of Fremont General Corp. fell 24% at the open Monday, plunging as the company said that it intends to sell its subprime residential real-estate lending business. In a statement late Friday, Santa Monica, Calif.-based Fremont General said that the decision was 'prompted by the company's receipt on Feb. 27 of a proposed cease-and-desist order' from the Federal Deposit Insurance Corp."

National Mortgage News. "Traders and other mortgage executives tell us that secondary market bidders are offering between 15 and 25 cents on the dollar for delinquent HELOCs. We've heard the bid prices from three trusted sources. One investment banker said a large California lender wanted 65 cents for a recent pool of bad seconds. Needless to say, the sale never went through."

"On Thursday one wholesale executive in Southern California told us that his two largest non-prime competitors had just raised their rates by 45 basis points each. This, of course, means that rates are going up for consumers."

"Who gets hurt? The subprime consumer. Can anything be done about this? No. Some lenders believe credit impaired borrowers have benefited from great rates the past three years. And now, the gravy train is over."

The Post & Courier. "The Federal Deposit Insurance Corp. has a warning for banks and thrift institutions: The recent slowdown in residential construction could reduce the demand for mortgages and commercial real estate and construction loans, all important factors in loan growth in recent years."

"While employment and income trends are positive in almost every region, the effects of the slowdown in residential construction are 'clearly visible,' said FDIC Chairman Sheila Bair."

The Register Star. "Matthew Bortoli, president of Quality Metal Finishing Co. in Byron, said there is unease in the manufacturing community."

"'There is a little weakness in future orders,' said Bortoli, whose company employs about 250 workers who make zinc die cast component parts and decorative chrome plating. 'It seems to be pretty widespread. A lot of it has to do with the slowdown in the housing market.'"

"When asked if he believed it was a cyclical dip or a sign of a larger slowdown in the economy, Bortoli said 'you always have to worry.'"

"Service industries in the U.S. expanded at the slowest pace in almost four years last month, suggesting the housing slump may be filtering through to the broader economy." "The Institute for Supply Management's index of non- manufacturing businesses including banking, construction and retailing fell to 54.3 in February from 59 in January, the Tempe, Arizona-based group said."

"Homeowners are finding it more difficult to use their equity as a source of cash after the yearlong housing slowdown put an end to rising property prices in many regions. 'The housing market is unambiguously having a broader impact on the economy, including on the services sector,' said economist Richard DeKaser."

The LA Times. "As more Americans default on home loans, federal regulators and members of Congress are looking to place new restrictions on mortgages for people with shaky credit, a move that could make it harder for many people to buy homes or refinance their mortgages."

"'We think additional guidance is necessary to address abuses in the market,' said Kevin Mukri, a spokesman for the Office of the Comptroller of the Currency. 'But we also want to be careful not to impose a regulatory standard that goes too far' and freezes out worthy borrowers, he added."

"'The challenge for regulators is to firm up standards without cutting off credit to the people who need it most--especially first-time home buyers and minority borrowers,' said Howard Glaser, a mortgage industry consultant and former U.S. housing official. 'Striking that balance could prove elusive.'"

"The politicians are not likely to stop anytime soon. Victims of predatory lending can tell heart-wrenching tales, a reality that was on display at a Senate hearing last month."

"Delores King, a Chicago retiree, recalled how a telemarketer lured her into a mortgage refinance. At the time, she had a monthly payment of $798. Her new loan, which started out at $832, has since adjusted to $1,488 a month. 'This is more than my entire monthly income,' she told lawmakers."

"'The danger here is that, in an ultimately ironic fashion, the very people you're trying to help are the ones you hurt the most,' said Kurt Pfotenhauer, senior vice president with the Mortgage Bankers Association."