Readers suggested a topic on the real estate industry in a down market. "Will RE/Mortgage business behavior improve or deteriorate in a bear market?"

One posts, "I believe it will improve incredibly but not by their doing. The market will dictate that they don’t run amok because there will be so little activity. 'If 100,000 houses are selling, how will anybody catch me if I fudge the numbers on 2?' That will change to, 'with only 1,000 houses selling I better not fudge on anything.'"

"'If we are making $30 billion in subprime loans who is going to notice my $6 million portion of this madness?' That will change to, 'there are so few loans being made that I better do everything by the book.' Reversion to reality will be 'the new paradigm' for the shysters."

The first reply, "You’re kidding yourself."

Another reply, "On the other hand, we may see a tendency to screw every last cent out of each individual deal, on the basis that the next deal could be a long way away. I’m thinking there will be some very hungry Realtors and Mortgage Brokers in a few months."

Another added, "Desperate times bring desperate measures. This, I assure you, is already happening. Fraud and deception will increase in the months ahead, no question about it."

One saw this, "I had a horrible thought. As the toxic loans solds as MBS explode, the buyers of those securities will be looking to the original sellers to buy them back for not performing. Would some of those original sellers, in desperation, look to any 'good' loans that they still have around to see if they have a demand clause, and if so, exercise the demand clause upon people in an last gasp attempt to raise cash?"

The New York Times. "On March 1, a Wall Street analyst at Bear Stearns wrote an upbeat report on a company that specializes in making mortgages to cash-poor homebuyers. The company, New Century Financial, had already disclosed that a growing number of borrowers were defaulting."

"Last week, New Century said it would stop making loans and needed emergency financing to survive. The stock collapsed. The analyst’s untimely call, coupled with a failure among other Wall Street institutions to identify problems in the home mortgage market, isn’t the only familiar ring to investors who watched the technology stock bubble burst precisely seven years ago."

"'The regulators are trying to figure out how to work around it, but the Hill is going to be in for one big surprise,' said Josh Rosner, an expert on mortgage securities. 'This is far more dramatic than what led to Sarbanes-Oxley,' he added, referring to the legislation that followed the WorldCom and Enron scandals, 'both in conflicts and in terms of absolute economic impact.'"

The Arizona Republic. "The Valley's real estate industry is lending regulators a hand in cracking down on mortgage fraud. Several real estate, escrow and mortgage firms are working not only to educate their own employees but those at other firms on how to detect fraud and what deals to pass on."

"Barbara McDugald, the Phoenix general counsel for Security Title, made mortgage fraud the subject of the agency's newsletter in December. 'We are turning away a lot of deals, but there's peer pressure in the industry because other firms are turning them away, too,' McDugald said."

The Denver Post. "Glenn Puller and Cindy Ingram are on their way to federal prisons for mortgage fraud. At a sentencing hearing last week, Puller received one year and Ingram received two years in prison for their separate roles as straw buyers in a massive mortgage fraud scheme in Aurora."

"'I apologize to the lenders,' Ingram told the court. Puller said the same."

"I wanted to laugh out loud in the courtroom. Lenders make money lending, even when borrowers never pay it back. The industry runs on loan volume, not loan quality. Mortgage companies sell the loans they make to Wall Street investment banks, which sell them to investors."

"This is why Puller and Ingram were able to get loans to acquire multiple homes at inflated selling prices of around $600,000 apiece."

"Among the lenders they defrauded was New Century Financial. New Century's three founders made more than $40.5 million selling stock from 2004 to 2006, according to a report in The New York Times last week."

"The founders do not seem punished to me. Meanwhile, the real losers are shareholders who didn't sell their stock, and homeowners, whose home values rise and fall in a mortgage market with lax underwriting standards."

"Former federal prosecutor Anthony Accetta, now a Denver-based fraud investigator, has helped shut down several mortgage companies for fraud over the years."

"'The guys at the top know exactly what's going on,' Accetta said of his experience. 'They want the lending standards reduced so they can make as many loans and collect as many fees as they can. ... They are the ultimate beneficiaries of the crime. And the crime is making false statements to get a mortgage loan.'"

"Another subprime market leader, Countrywide Financial, recently reported that 19 percent of its subprime loans were more than 30 days delinquent. Before news of Countrywide's widening subprime delinquencies broke, its CEO, Angelo Mozilo, sold $140 million in stock over the past 14 months, The Wall Street Journal reported last week."

"Mozilo defended a 19 percent delinquency rate. 'That means 81 percent of these subprime borrowers are making their payments on time,' he told the Journal. 'That 81 percent never would have had the opportunity to own a home.'"

"Countrywide also was among lenders Puller and Ingram apologized to in court."