Some housing bubble news from Wall Street and Washington. CNN Money, "In the latest sign of trouble for the battered real estate market, one of the nation's top home builders warned Tuesday that it has yet to see the normal start of the spring home buying season, as it reported sharply lower sales for the first three months of the year. D.R. Horton, the nation's No. 2 home builder, reported that the number of new homes it sold in its fiscal second quarter fell nearly 37 percent."

"'Market conditions for new home sales continue to be challenging in most of our markets as inventory levels of both new and existing homes remain high,' said a statement from chairman Donald R. Horton."

"The company said it continues to see an increase in the use of sales incentives in many of its markets. And it said that its cancellation rate, which calculates sales orders cancelled divided by gross sales orders, was 32 percent in the quarter, which it said was essentially unchanged from the first quarter."

"The worst declines were in California, where volume was down 59 percent, and value of the homes sold fell 56.8 percent."

From Reuters. "It has become more difficult for many buyers to obtain mortgages as lenders have tightened their underwriting standards. The steeper decline in the dollar value of D.R. Horton's home orders, relative to the number of orders, suggests that some buyers are 'downsizing' to buy homes they can more easily afford."

"First-time home-buyers account for about 40 percent of D.R. Horton's sales."

"The company has contracted some operations to prepare for a slowing housing market, including a reduction in the number of lots it controls."

From Bloomberg. "The average price for a D.R. Horton house ordered in the quarter fell 6 percent to $260,373 from $276,660 a year earlier. Horton said in the statement 'we continue to see an increase in the use of sales incentives in many of our markets.'"

The New York Times. "Some of the problems afflicting mortgages sold to borrowers with weak, or subprime, credit increasingly appear to be cropping up in loans made to homeowners who were thought to be less risky."

"In February, 2.6 percent of Alt-A loans were delinquent by 60 or more days, up from 1.22 percent a year before, according to FirstAmerican LoanPerformance."

"Until recently, mortgage companies had been able to sell loans to Wall Street banks and other investors. 'Now you are selling at par or lower in some instances,' said Thomas M. McCarthy, a managing director at a real estate investment firm that brokers the sale of mortgages. 'It really throws the business upside down.'"

"'Alt-A seems to be located regionally in spots where the market is having a great deal of difficulty, particularly in Las Vegas, Arizona and Florida,' economist Mark Zandi said."

The Financial News. "Trading volumes of Alt-A mortgages, which are considered less risky than the US sub-prime sector, have hit a wall in the past month as banks reported problems selling the loans in the secondary market."

"Analysts are warning this is the second problem to emerge after those in the higher risk sub-prime market began in January."

"Mehernosh Engineer, senior credit strategist at BNP Paribas, said: 'This is starting to look more like what happened in 1991– a consumer hard landing. Sub-prime and Alt-A is more like a $3.5 trillion problem, which will progress gradually through 2007 and 2008.'"

"M&T Bank last week issued a profit warning after it fetched low bids on mortgages it tried to sell in the secondary market. M&T said it found 'fewer bids than normal and the pricing of those bids was lower than expected.'"

"Mark Adelson, head of structured finance research at Nomura Securities in New York, said: 'There’s not less interest, it’s just that the price is worse, which is not what M&T wants to hear. You can sell the loans, it’s just that if you’re greedy, you’re not going to get the price you want.'"

"'There's no question the credit problems we've seen in sub-prime are blending into Alt-A,' said analyst Matthew Howlett. 'It's reflective of the poor underwriting that has gone on in this sector.'"

"Howlett said part of the problem was that Alt-A lenders had lowered their lending standards. 'We're going to see more Alt-A loans perform badly because they're not traditional Alt-A loans,' he said. 'They're sub-prime.'"

"Subprime lender New Century Financial Corp. has asked a federal bankruptcy judge to speed up the auction and sale of its lending platform so that the business isn't wiped out, court papers show."

"New Century said it wants to sell the platform by early May, and sees an 'exigent and immediate need' to set up bidding procedures, according to a late Monday filing."

"'There is a narrow window of opportunity,' wrote Marcos Ramos, a lawyer representing New Century. 'Indeed, it might be difficult to pursue and complete a sale of the loan origination platform after early May because the debtors have ceased originating loans.'"

"Prospects for a US growth rebound in the second half of 2007 have dimmed as the housing recession deepens and businesses cut spending, according to economists surveyed this month by Bloomberg News."

"The subprime problem 'is a brand-new kind of shock,' said Ethan Harris, chief U.S. economist at Lehman Brothers Holdings Inc. in New York. 'The data we've seen lately is consistent with an economy that's just not picking up.'"

"'No one's sure of the scope of the problems,' said Harris. 'We don't have a lot of history to draw from in estimating the impact. It's difficult to quantify.'"

"'Since the risks to both economic growth and inflation are up, it makes the Fed even more uncertain,' Lehman's Harris said. 'The Fed is a deer in the headlights right now. They don't know which problem to address.'"

From MarketWatch. "The subprime mortgage crisis has re-ignited scrutiny of the industry and people who broker home loans. The main problem is that, counter to common perception, mortgage brokers do not represent the borrowers who pay them for advice. Instead, they are more like independent salespeople who are often paid as much by the lenders offering loans as the borrowers."

"As the housing market boomed, mortgage brokers' influence grew as they became involved in arranging the majority of home loans. 'We all have some culpability,' said Steve Heideman, a mortgage broker who heads an organization dedicated to improving disclosure in the business. 'The problems and abuses are happening because brokers see it as their right to make as much money as they can on a loan.'"

"There's a basic problem with mortgage brokers being paid by lenders as well as borrowers and 'very few' people know this happens, he added."

"'It's a dirty little secret of this business,' he said. 'It shows a lack of confidence on the part of a mortgage broker to not tell the client what they're making on the back side.'"