Some housing bubble news from Wall Street and Washington. "While an uncertain housing market anxiously monitors the spring selling season for hints of a turnaround, home-builder chief executives are keeping a close eye on their costs and the overhang of unsold homes on the market."

"'The key to the analysis of where home builders are is the amount of speculative inventory still remaining on the market,' said Robert Toll, CEO of Toll Brothers Inc. 'There's the most speculation right before the market cracks,' Toll said. Although the shakeout has driven many flippers from the market, 'it's remarkable we still have speculative investment in the market even today.'"

"Centex's CEO Tim Eller agreed that the past few years have seen 'an unprecedented level of speculative investing in housing,' which is visible in the number of vacant homes on the market, both new and existing, which he estimated at about 1 million during the current correction."

"With all the excess liquidity in the housing market and the amount of house-flipping, 'the consequence was considerable excess.' He estimated the housing market could be in the middle phases of a three-year correction."

From MarketWatch. "Shares of subprime mortgage firm Accredited Home Lenders fell almost Wednesday, its second day of big losses as it became the latest target of sellers nervous about borrower defaults."

"On Wednesday Piper Jaffray analysts expressed some surprise at how far Accreditied and rival New Century Financial had fallen. 'While we understand that the subprime lenders are in trouble, we are somewhat surprised by the large gap between the current stock prices and last reported book values for the two,' the analysts said."

The Orange County Register. "KPMG, New Century's auditor, believes that the company, the nation's No. 2 subprime lender, could face insolvency unless it reaches new agreements with firms that lend it money to make loans. And New Century will report a loss for all of 2006 and not just for the fourth quarter, as it previously announced. New Century declined any comment Monday."

"Impac Mortgage Holdings of Irvine has delayed the filing of its annual report, saying something was wrong with how it treated loan sales and cash payments between its own units on its 2004 and 2005 cash-flow statements."

From Reuters. "Proposed guidance on subprime mortgages by regulators would likely pinch mortgage production of Countrywide Financial Corp., the company's chief financial officer said."

"Sixty percent of Countrywide's customers seeking hybrid adjustable-rate mortgages, or ARMs, such as '2-28' loans would fail to qualify under the guidance that urges lenders weigh the borrower's ability to repay at the highest possible rate during the life of the loan, Countrywide CFO Eric Sieracki said."

"The global junk bond default rate is expected to rise to 2.7 percent by the end of the year, Moody's Investors Service said on Wednesday."

"'Defaults are primed for a potentially sharp rise going forward,' said David Hamilton, Moody's director of corporate default research in New York. Recent equity market volatility, weakness in subprime lending and expectations for slower economic growth all indicate weaker credit conditions, he said."

The Washington Times. "In another sign the mortgage crunch is spreading, Lehman Brothers Holdings Inc. announced it is cutting the ratings of Countrywide Financial Corp., the largest mortgage lender, and other prime lenders as defaults surge."

"'Prime loans will see rising default rates as subprime has, due to increasingly weak underwriting in recent vintages,' analyst Bruce Harting said. 'The rapidity, breadth and depth of the subprime sector meltdown has been extraordinary, even in the context of an environment in which most industry observers felt that major problems in the subprime space were inevitable and overdue.'"

From KHOU. "There’s a change in the Houston area housing market. You can hardly drive a city block without spotting a home for sale or some new construction, but getting into those homes is now much harder."

"It’s not because of fewer buyers, but instead fewer banks willing to take the risk. That could mean the recent housing boom might become a bust for some lenders."

"'Our clients are not being approved. They're not being approved,' complained Realtor T.J. Jackson."

"The U.S. Department of Treasury reports at least 20 major lenders have stopped offering home loans to borrowers with lower credit ratings. Jackson says, that's hurting everyone."

"'We don't know what's to come, everything is based on your credit and I'm not making light of credit. (It) should be good but not everyone can help that,' she said."

"'The 100 percent financing just won’t be a reality for them,' said Matt Frings.' Frings is in the mortgage lending business. In the last few weeks, he's seen minimum credit scores for sub prime borrowers go from 580 to as high as 640. Meaning, if they don't have at least 640, Frings is being forced to turn down application after application."

"'It hurts everybody for them to be, to be not be able to be financed,' said Frings."

Houston Real News. "National sub-prime mortgage lender Argent Mortgage is not alone in worrying about its future. The subprime mortgage market is reacting to the realities of financial risk: providing less capital, to less risky clients at higher prices."

"This particular loan officer closed nearly a dozen loans over the previous six months with Argent. Other loan officers had achieved similar success. The problem for this loan officer is that one of the loans did go delinquent, within the first six months."

"Argent's reaction was to pull the relationship with the entire bank."

The Associated Press. "The number of mortgage fraud cases investigated by the FBI almost doubled the past three years, reflecting a problem that is 'pervasive and growing,' the bureau said Wednesday in its annual report on financial crimes."

"'The true level of mortgage fraud is largely unknown,' the agency's report said."

"Chicago Federal Reserve President Michael Moskow on Wednesday did not rule out another interest rate increase to tamp down inflation, even after a recent run of soft economic data. 'It is much too early to say that inflation is no longer a concern,' Moskow said."

"The extent of the housing slowdown remains a key question, and recent data show downside risks continue, especially given an overhang of inventory, Moskow said. 'There also are financial risks associated with the declines in housing markets. Notably, defaults on subprime mortgages could have a larger-than-expected effect on households and lenders,' he said."

"Federal Reserve Chairman Ben Bernanke urged Congress on Tuesday to bolster regulation of mortgage giants Fannie Mae and Freddie Mac, and suggested limiting their massive holdings to guard against any danger their debt poses to the overall economy."

"He recommended that their holdings might be linked to a 'measurable public purpose, such as the promotion of affordable housing.'"

"Fannie Mae's and Freddie Mac's combined portfolios from the end of 1990 until the end of 2003 have grown more than tenfold, to $1.56 trillion, Bernanke said. Besides buying mortgage-backed securities, the mortgage giants purchase other types of assets for their own investment portfolios, Bernanke said."

"Yet, less than 30 percent of their current portfolio holdings are oriented toward affordable housing, Bernanke said."