Some housing bubble news from Wall Street and Washington. "D.R. Horton Inc. early Thursday said profit in its latest quarter fell 85% from a year earlier as the company booked land-related charges and said it continues to grapple with a challenging market for residential housing. Its results for the quarter ended March 31 included pre-tax charges of $67.3 million for inventory impairments and $13.9 million for write-offs and costs related to land-option contracts it does not intend to pursue."

"'Market conditions in the homebuilding industry continue to be challenging in most of our markets as inventory levels of both new and existing homes remain high, and further increases in the use of sales incentives continue to put pressure on profit margins,' said Chairman Donald R. Horton."

"The company said it closed 9,792 homes in the latest quarter, down from 12,570 a year earlier."

From Reuters. "D.R. Horton, the largest U.S. home builder, on Thursday said it has cut 10,000 jobs since last spring and now has a staff of about 7,300. Horton also said it has seem some increased defaults on relatively new loans."

From MarketWatch. "Pulte Homes warned late Wednesday that losses for the first quarter will come in deeper than previously anticipated. The homebuilder said it expects a net loss from continuing operations for the quarter. The results will include between $130 million and $140 million in land-impairment charges."

"'The operating environment for homebuilding continues to be challenging, with orders and closings remaining under pressure,' Pulte CEO Richard Dugas said."

"Net new orders fell to 8,499 for the quarter, a 21% drop from the same period last year. Closings dropped 37% to 5,420 homes during the period."

"Many investors and analysts expect the market downturn, caused by a glut of homes for sale, tighter lending standards and weak demand, to worsen until at least the second half of this year."

"'I think it's a pretty severe downturn,' said Robert Curran, Fitch lead home building analyst. 'Could it be more severe still? Obviously.'"

"'The builders are the last ones to see that, because the resale market drives the new home market,' said analyst Jim Wilson. 'You have to start seeing (that) the resale market is seeing less inventory, and so far it's not. It's seeing more,' he said."

"'There's way too much resale inventory sitting out there that hasn't been and needs to be marked down in price and needs to clear before you have any need of new homes,' Wilson said."

"Meanwhile, the year's supply of new houses is expected to be about 1.2 million, Fitch's Curran said. As a result, home builders will add 300,000 homes to the current overhang of new homes for sale, Curran forecast, adding that the overhang is already troubling at about two months worth of sales."

From CNN Money. "Swapping risky mortgages for those with steady payments sounds like a reasonable plan to keep millions out of foreclosure. But the way mortgage products have been packaged and sold into financial markets presents a big hurdle."

"This kind of restructuring may be complicated because most of the loans have been 'securitized,' bundled together and sold into the capital markets."

"In the first place, servicers don't have quick access to the actual groups that own these loans. A bigger problem may be that the servicers' contracts with investors often prohibit them from taking remedial actions with non-performing loans."

"'Subprimes sold into securitization are governed by terms of agreements signed when they were sold. Servicers have to abide by those agreements,' says Doreen Woo Ho, president of Wells Fargo Consumer Credit Group."

"Terms may, for example, not allow the loan to be modified until it is at least 90 days delinquent, according to Marietta Rodriguez, a director of a non-profit, community development organization."

"In addition, the agreements between servicers and investors may not allow borrowers to work out their problems unless they can bring their payments current within a six-month period, according to Rodriguez. 'That puts the borrower in a serious financial bind,' she says."

"Another impediment that can work against bailout efforts is stratospheric home prices. Many homes bought with subprime loans are in places like California and other high-cost areas where even many modest homes far exceed the conforming loan limits of these agencies, which is about $417,000."

"Federal regulators and mortgage lenders Tuesday warned Congress against moving too aggressively to regulate the mortgage industry in response to a soaring number of home foreclosures."

"'There is no silver bullet,' Sheila C. Bair, chairwoman of the Federal Deposit Insurance Corp., told the House Financial Services Committee."

"'I think we should hold the servicers' and the investors' feet to the fire on this,' she said, referring to failure of investors to conduct due diligence before buying mortgage-backed securities. 'We did not have good market discipline with investors buying all these mortgages. There may be some issues of disclosure.'"

From Bloomberg. "A bailout for subprime borrowers wouldn't be the best use of government dollars, said Representative Spencer Bachus of Alabama. 'I can't agree to taking taxpayers' money and addressing this problem,' Bachus said."

"Freddie Mac CEO Richard Syron also cautioned against a borrowers' bailout. Such a policy 'could have lasting, unintended consequences that harm the housing finance system in the long-term,' he said. 'The ability to enforce a mortgage contract, including the use of foreclosure, is critical to continued investor confidence in the U.S. housing market.'"

"Federal lawmakers can take steps to protect consumers from bad mortgages in the future but have limited options in how to assist troubled borrowers today, a Congressional panel heard."

"'Legislation going forward will not help this current group of people who are entrapped,' said Barney Frank, chairman of the House Financial Services Committee at the opening of a hearing on the subprime mortgage crisis."

The LA Times. "A Capitol Hill summit on the mortgage problem (was) convened by Sen. Christopher J. Dodd. Following the summit, Dodd said...that 'lenders raised questions' about what can be done to rework mortgages that may be pooled together in large securities owned by investors."

"The summit fueled no expectation of a taxpayer bailout. Dodd, who is chairman of the Senate Financial Services Committee, has been aloof to the plan, and Sen. Richard C. Shelby blasted it."

"'It's a bailout,' Shelby said. 'You can't save people from themselves in the marketplace.'"

"Some in the Senate have raised the possibility of direct government intervention to help sinking borrowers. Dodd, who is chairman of the Senate Banking Committee, has backed away from the idea. 'I'm not overly anxious to legislate,' he said Wednesday."