Some housing bubble news from Wall Street and Washington. "National City Corp., the Ohio bank that sold its subprime mortgage unit to Merrill Lynch & Co. last year, said profit fell 31 percent as it set aside more money to cover bad loans. National City put $107 million into a reserve to cover bad loans, quadruple the amount from a year earlier, citing a 'difficult environment' in the mortgage market."

"Delinquencies reached a four-year high last year, cooling demand from investors who buy loans and package them into securities. National City said last month it would hold on to more of its mortgages rather than selling them at depressed prices."

From Reuters. "Net charge-offs rose 21 percent to $147 million, including $53 million for nonconforming mortgages. These include 'Alt-A,' short for 'Alternative-A,' which are between prime and subprime in quality."

"'The secondary market in mortgages has stabilized, but gain on sale, particularly in the Alt-A slice, has been under pressure,' National City President Peter Raskind said."

From Bloomberg. "Washington Mutual Inc., the biggest U.S. savings and loan, will cut back on terms that make subprime home loans more likely to default and step up 'Alt-A' lending to restore profit at its mortgage unit by year’s end."

"The company, which lost $113 million on home mortgages in the first quarter, is making fewer loans that don’t document a borrower’s income and cutting second mortgages, executives told investors Friday."

The Associated Press. "American Home Mortgage Investment Corp. said Monday first-quarter profit shrank 44 percent because of mounting payment defaults and sagging home prices."

"CEO Michael Strauss said in a statement a 'severe disruption' in that market forced prices for mortgages down. Mortgage lenders across the country are reporting that investors in the first quarter lost their appetite for mortgage debt as home prices slumped and borrowers defaulted on loans more frequently."

"AHM said it set aside $60.5 million in anticipation of missed payments on loans. Most of the reserve was for a type of loan in which the lender doesn't verify the borrower's income and the home doesn't provide enough collateral for the debt. AHM said its charges for loan delinquencies should diminish in the future because the company stopped issuing this type of loan."

"Credit Suisse is being sued by a Florida insurer that says it lost money on investment-grade bonds backed by subprime mortgages sold by the bank."

"The suit, filed last week by Bankers Life Insurance, is 'one of three to five in the pipeline' involving securitizations by Credit Suisse, said Dale Ledbetter of one of two law firms representing Bankers Life."

"'We suspect that once people understand what occurred here, there's going to be a lot more,' Ledbetter said. A total of $302.6 million of bonds were originally issued in the deal."

"Bankers Life claimed that divisions of Credit Suisse caused it to lose money by overstating how much of a loss after foreclosures that the insurance on the loans would cover. It also says that the bank accepted 'shoddy, inferior' loans, failed to buy back fraudulent ones, and covered up delinquencies of homeowners, according to the complaint."

"Payments were being advanced on borrowers' behalf to 'maintain the illusion' that defaults were not occurring, the suit says.

"Moody's Investors Service, citing more subprime mortgage loan losses than forecast, has downgraded the ratings on 27 different pools of securities created over the past two years by Lehman Brothers Holdings."

"Bonds created through Lehman's Structured Asset Investment Loan Trust from 2005 and 2006 were cut because of 'higher-than-anticipated rates of delinquency,' Moody's said Friday."

"'The servicers have started to sell the properties and therefore losses have started to come in,' said Nicolas Weill, Moody's chief credit officer for its Structured Finance Group in New York."

From The Record. "We've come a long way since the giddy heights of 2005, when the real estate market peaked. Hovnanian Enterprises Inc., the nation's sixth-largest home builder, has lost a total of more than $174 million for the past two quarters, its first losses in at least nine years."

"In an extensive interview last week with The Record, Ara Hovnanian, the company's CEO, talked about his company, the housing market and the home-building industry, where they are, and where they're headed."

"Q. How's the outlook for housing for the rest of 2007? A. 'My response is different today than it would have been a couple of months ago. Had you asked in January or February, I would have said it really looks like the market is stabilizing. Then this whole issue regarding the subprime mortgage industry came out, and that caused sales to dip.'"

"'Now my prognosis is not as optimistic as it was. Obviously, the industry is still selling a lot of houses, but the recovery and spring bounce-back we had been hoping for seems to be stalled.'"

From MarketWatch. "A sharp drop in investment-home sales offset a record number of vacation-home purchases to bring down the overall share of second-home purchases in 2006, the National Association of Realtors reported Monday."

"'We expected the drop in investment sales because speculators left the market in 2006, which caused investment sales to fall much faster than the primary market,' David Lereah, the association's chief economist, said in a news release."

"The median price of a vacation home was $200,000 in 2006, down 2.0% from $204,100 in 2005. Investment-home prices were also down, with the typical home costing $150,000 last year, down 18.3% from $183,500 in 2005."

"'The drop in investment prices comes as no surprise, but for vacation-home prices to edge down in a record market is a bit puzzling,' Lereah said. 'It may result from a large dumping of inventory on the market by speculators, especially in the condo sector, with long-term, second-home buyers taking advantage of the glut and buying at negotiated discounts.'"

"David Lereah, chief economist of the National Association of Realtors, is leaving NAR to join a new business entity next month, NAR said Monday."

"Lereah has directed NAR's research division, regulatory and industry relations division and other activities. He will leave the association in mid-May, NAR said."