Some housing bubble news from Wall Street and Washington. MarketWatch, "Boosted by warmer weather in the Northeast and Midwest, sales of new homes increased by 2.6% in March to a seasonally adjusted annual rate of 858,000, the Commerce Department reported Wednesday. Sales of new homes were off 23.5% compared with March 2006."

"The inventory of unsold homes rose by 1,000 to 545,000 in March, representing a 7.8-month supply. Sales in the previous three months were revised lower as well. February's revised annualized sales pace of 836,000 was the lowest since September 1999."

"It can take up to six months for a trend in sales to emerge. New-home sales have averaged 924,000 per month over the past six months, compared with 951,000 in the six months ending in February. The six-month sales average is now down 23% from last March's 1.20 million pace."

"Home builders have piled on incentives to sell homes and reduce inventories. Such incentives are not subtracted from the sales price reported to the government. Home builders have reported a large increase in cancellations in recent months. Cancellations are not reflected in the government data, so the reported sales are likely overstated."

From Bloomberg. "'Considering the weather was unseasonably mild in March, the report certainly wasn't overly positive news and is consistent with the idea that sales are still struggling,' said Phillip Neuhart, an economist at Wachovia Corp."

From Reuters. "Bank of Spain governor Miguel Angel Fernandez Ordonez attempted to reassure financial markets yesterday that the country’s housing market was in only a gradual slowdown. This came after real estate stocks tumbled on fears that a decade-long property boom was unravelling."

"'We think the property market, construction in general, is going to have a soft landing, which is what it’s having,' Ordonez said after speaking in congress. 'You know what the stock market is like: it’s calm one day, goes up the next. It doesn’t do things based on reality.'"

From Ireland Online. "Economist Diana Choyleva said holiday home owners who flocked to Spain over the last couple of years could now see the price of their investment fall. She added: 'This is not good news for foreign investors in Spain. The problem is in supply. We have had over investment on a gigantic scale and it has already started a slowdown in house price growth.'"

The Financial Times. "Investors got the jitters after Astroc, a Valencian real estate developer, went into free-fall last week when its audited accounts revealed some of last year’s profits came from the sale of Astroc assets to Enrique Banuelos, its chairman."

"Meanwhile, the heavy debt load of some real estate groups and worries about oversupply, with 800,000 new housing starts approved for this year, compared with an estimated demand for 600,000, also contributed to the sell-off."

"Cheating on mortgage applications is so widespread and so seldom punished that it's fueling an increase in foreclosures that will prolong the housing slump, said Robert W. Russell, counsel to the director of the Office of Thrift Supervision, which oversees savings and loans."

"'Misstatements about employment and income are being made every day,' Russell said. 'The brokers are just putting down on paper what the underwriters would require. There are borrowers providing false information as well.'"

"Loans that require little or no documentation of income soared to $276 billion, or 46 percent, of all subprime mortgages last year from $30 billion in 2001, according to analysts at Credit Suisse Group."

"As part of a pending class-action lawsuit in State of Minnesota District Court alleging Ameriquest Mortgage Corp. charged borrowers extra fees, former account executive Mark Bomchill, who worked in the Plymouth, Minnesota, branch office, said it was 'a common and open practice at Ameriquest for account executives to forge or alter borrower information or loan documents.'"

"'I saw account executives openly engage in conduct such as altering borrowers' W-2 forms or pay stubs, photocopying borrower signatures and copying them onto other, unsigned documents and similar conduct,' Bomchill said in a sworn statement."

"'It wasn't really done behind closed doors,' Bomchill said."

The Herald. "The shutdown of wholesale lender Mortgage Investment Lending Associates Inc. was sudden, but not a surprise to many of the employees laid off over the past year."

"'I've been waiting for it,' said Amorita Simon of Everett, who lost her job there in February 2006. 'And I knew the way that MILA ran itself, it was only a matter of time.'"

From Law.com. "While the bankruptcy engagements are likely to be short due to the lack of operations and asset selloffs by some of the failing companies, the selloffs will benefit other attorneys. Mergers and acquisition colleagues are stepping in to assist the companies in selling some of their loan portfolios at discount prices."

"'We're seeing this hit across multiple practice areas,' said Jerry Biederman, an attorney in Chicago, adding that this is the start of 'a whole panoply of subprime-related legal issues.'"

"Investors who bought some of the mortgage-backed debt securities, which have also declined in value, may also have claims against subprime lenders, attorneys said. Class actions on that front may also reach beyond the lenders to the banks that were selling the securities on behalf of the lenders, said Chris Seeger, a plaintiffs' attorney in New York who is researching a lawsuit he plans to file this month."

"'We have many people who are contacting us and feel like they've been victims of the subprime lending industry,' Seeger said."

From McClatchy Newspapers. "Anyone looking to point a finger of blame for the meltdown in the subprime mortgage market may need more than two hands. It took the action, and the inaction, of many players to produce today's mess, which threatens to slow the U.S. economy further."

"'Everyone has a share in the blame; lenders, borrowers, regulators, investors. There were a lot of mistakes, and everyone made them,' said economist Mark Zandi."

"'It's hard to blame the regulators for most of this, because these guys like New Century and other outfits in trouble are unregulated,' said Robert Litan, an expert on federal regulation."

"'We have a structural flaw in the system, and lenders and borrowers took advantage of this, and people got whacked,' said Former Federal Reserve Governor Edward Gramlich. 'Most of the fixes are, and have been all along, measures that could only be changed by legislation.'"

"'We knew there was excessive use of adjustable (mortgage) rates. That was a time when the Fed had interest rates very low, for good macroeconomic reason, but it made everyone vulnerable to this problem' that we have today, said Gramlich, a Fed governor from 1997 to 2005 and the author of the forthcoming book 'Subprime Mortgages: America's Latest Boom and Bust.'"

"Recovery of the US market for new homes could take another year if trouble in the adjustable-rate subprime mortgage market spreads to other types of residential lending, credit-rating agency Standard & Poor's said."

"'We do not expect to see a recovery for most rated home builders until 2008, under the best of circumstances,' the rating agency said in a research note. 'In fact, a rebound could easily slide into 2009 if a subprime contagion spreads to the Alt-A and prime products.'"

"S&P said rising foreclosure rates and tightening consumer credit raise additional red flags regarding a cyclical housing downturn that was already deeper and broader than previously anticipated."

The Vancouver Sun. "West Fraser Timber president Hank Ketcham said Tuesday the forest industry is facing the worst recession he can recall with no end in sight."

"'To us it is a typical cycle. We have seen it in the mid-'70s, early-'80s and early-'90s. In real dollar terms, lumber prices today are lower than they were in 1982, which was the worst recession I remember,' the West Fraser president, a lumberman since 1973, told analysts."

"The benchmark price for lumber from the B.C. Interior dropped to $253 US a thousand board feet in the first quarter of the year, down from $343 US a thousand board feet one year."

"'Every time you get into this it sure seems to take a lot longer than you would like. But sitting where we sit, we think we could be in this for a while and we've just got got to buckle down and drive our costs down. That's what we are doing every day,' Ketcham said."