Some housing bubble news from Wall Street and Washington. "New Century Financial Corp. became the biggest subprime mortgage company to go bankrupt in the past year after the lender, which specialized in loans to people with poor credit records, was overwhelmed by customer defaults. The company filed for Chapter 11 bankruptcy protection from its creditors today in federal court."

"The largest creditors included Wall Street firms that financed New Century's lending operations."

"'They're clearly going to be the poster child for bad practices in the mortgage industry,' said analyst Matthew Howlett. 'When all is said and done, the management team will be to blame.'"

From Reuters. "New Century, like many lenders focusing on people with poor credit histories, was forced to buy back loans from investors that went bad just months after they were made, straining its finances."

"'We are only at the very beginning of the problems facing subprime,' said analyst Brad Hintz. 'What you are seeing is that this liquidity crisis is continuing in the marketplace.'"

From Bloomberg. "M&T Bank Corp. said low bids for the Alt-A mortgages it planned to sell will cut first-quarter profit by $7 million. Lenders this month have found demand falling for riskier mortgages even apart from so-called subprime ones."

"A unit of Cleveland-based National City Corp. that makes home equity loans through brokers today undid much of a loosening of guidelines it introduced only Feb. 28, rolling back standards further in some ways, as a result of demand from loan buyers 'evaporating quickly,' according to an announcement obtained by Bloomberg."

"'Unfavorable market conditions and lack of market liquidity impacted M&T's willingness to sell Alt-A loans in the first quarter,' the company said in the statement."

The Associated Press. "Many of the media reports on M&T Bank Corp. Monday will no doubt focus on mortgage loans. Actually, though, mortgages represent a relatively small slice of the bank's problems."

"Only about a third of the shortfall can be blamed on a shrinking appetite for mortgage debt. The remainder of the shortfall relates to an old story for retail banks in the U.S.: higher costs to raise money."

"At a recent auction of Alt-A loans, fewer bids than normal were received and pricing was lower than expected, M&T said. Meanwhile, the bank also said it would have to repurchase problem loans sold to investors."

"Barclays Bank Plc said on Monday it had paid $76 million for subprime lender EquiFirst Corp., about two-thirds less than its original offer, as a rising tide of delinquencies hurts the market for risky mortgages."

"A Barclays spokesman said the lower price reflected slowing housing prices and higher mortgage delinquencies in the subprime sector."

"The price declined from $225 million (to) $76 million and may be adjusted during the second quarter, London-based Barclays said. EquiFirst is the 12th-biggest subprime wholesale mortgage originator in the U.S, the bank said Jan. 19 when it announced the deal."

"'The original contract had provisions to ensure the credit quality of what we took on was as expected,' spokesman Peter Truell said in an interview today. 'The closing price was modified' due to a reduction in reserves, he added."

From USA Today. "The crisis in risky mortgage loans is shedding light on aggressive lending practices by some of the largest U.S. home builders, which stand accused of using lax standards and illegal sales tactics to arrange financing for buyers."

"The Department of Housing and Urban Development is taking more actions against home builders and their affiliated lenders, says Brian Sullivan, a spokesman for HUD. 'We are seeing increased consumer complaints about builders,' Sullivan says. 'Including kickbacks and illegal referral fees, phantom incentives and other violations of our real estate laws.'"

"The subprime mortgage crisis is likely to spread to a higher tier of loans known as Alt-A, according to an economist affiliated with the University of California at Los Angeles."

"'The question is to what extent,' said David Shulman, a senior economist with the UCLA Anderson Forecast in Los Angeles. 'That could be the next shoe to drop. We suspect the problem in the subprime area is just the tip of the iceberg for the mortgage market as a whole.'"

From Fitch Ratings. "Today, many properties are purchased and financed with virtually no equity. Loan to value ratios often exceed 100% and, when considering the entire amount of debt on a property, Fitch is seeing more loans where actual debt service shortfalls exist at the outset."

"Recent struggles, and in some cases defaults, in the condo conversion market are viewed by Fitch as an indication of the danger of relying on valuations predicated on significant future value growth."

"Fitch has begun to see delinquencies and defaults of condo loans in the CMBS market. Sales of condos have slowed or stalled in many markets, including South Florida, Manhattan and Las Vegas. Many projects have been canceled (some mid-construction) and others have been turned into or reverted back to rentals."

"The rental value of the properties is usually significantly less than the anticipated conversion value, and therefore many developers are not able to meet debt obligations."

"A massive wave of defaults is set to hit the CDO (collateralised debt obligation) market following the sub-prime mortgage meltdown in the U.S., although this could take a year to play out, a fund manager told Reuters."

"'I do think a massive default cycle is about to start in the CDO market. It's mad. Sub-prime will create massive defaults,' Francois Barthelemy told Reuters. 'The event that will destroy the CDO market has already happened. But it will take another year to trickle down. They (the holders of the CDOs) don't realise what's going to happen.'"

"Sales of bonds backed by subprime mortgages are tumbling as investors and bankers, concerned about rising delinquency rates, pull back from what had been one of Wall Street's fastest growing businesses."

"About $79.3 billion of securities backed mainly by loans to people with poor credit or high amounts of debt were issued this year, down 37 percent from $125 billion in the same period last year, according to a Citigroup Inc. report."

"'Right now the CDO machine has essentially been put on hold,' said Bill Martin, a portfolio manager of $35 billion in mortgage bonds at TIAA-CREF."

"Moody's on Monday said it may cut its ratings on Technical Olympic USA, Research) deeper into junk, citing expectations the company may further amend its credit agreements to account for lower interest rate coverage. The homebuilder last month swung to a large quarterly loss compared with a profit in the year-ago quarter."

"Technical Olympic is also expected to be challenged in 2007 to pare back its land and housing inventory to turn its free cash flow positive on an annual basis, Moody's said."