Some housing bubble news from Wall Street and Washington. "The Pending Home Sales Index, based on contracts signed in February, stood at 109.3 – down 8.5 percent from February 2006. The PHSI in the South was 8.0 percent below a year ago. The index in the Midwest was 9.7 percent lower than February 2006. The index in the Northeast was 8.2 percent below a year earlier. In the West, the index was 8.2 percent lower than February 2006."

"David Lereah, NAR’s chief economist, said there has been a steady narrowing from year-ago readings since last July. 'If it wasn’t for the unusually bad weather in February, we’d be seeing a better performance in pending home sales,' he said. 'We also may be seeing some fallout from a decline in subprime lending.'"

From Reuters. "Grant Thornton resigned as auditor for two troubled subprime lenders because 'they no longer meet our requirements for client acceptance,' the auditor said."

"The two lenders, Accredited Home Lenders Holding Co. and Fremont General Corp., said separately Monday that Grant Thornton had resigned as their auditor after advising them that it needed to 'significantly expand' the scope of its audit of their 2006 financial statements."

"Both firms said they were now seeking new independent auditors but that there was no guarantee that they would be able to find them."

From Bloomberg. "Fremont, the No. 5 U.S. subprime lender, was cited by federal regulators last month for giving loans to borrowers unable to repay them. The Santa Monica, California-based company shut its home-lending operations March 5, put employees on paid leave and hired Credit Suisse Group to sell the mortgage unit."

"'The subprime market is one that is getting additional focus by everyone, not just accountants, but in the entire business community' said Grant Thornton CEO Edward Nusbaum."

"Accredited Home Lenders Holding Co. said in a separate SEC filing today that Thornton resigned as auditor. Neither company gave a reason. Last month, Thornton said the San Diego-based lender's financial problems were severe enough to cast a doubt on its ability to stay in business."

"Thornton's departure will cause an 'additional delay' in the filing of the lender's annual report, Accredited said in a statement on its Web site."

"'I don't think this is about reputation,' Nusbaum said today. 'It is about the risks and issues that are described in the filings' by Fremont and Accredited."

The New York Times. "From an 11-story steel-and-glass tower that housed its headquarters in Irvine, Calif., the New Century Financial Corporation ruled as one of the nation’s largest mortgage lenders to individuals with weak, or subprime, credit during the recent housing boom. That reign officially ended yesterday."

"'It’s definitely the end of an era,' said Guy Cecala, publisher of an industry newsletter."

"Earlier, New Century said it owed $17.4 billion on credit lines from investment banks; most of those debts were secured by loans that New Century made with those funds. Many of those banks, which declared New Century in default in early March, began seizing the loans or auctioning them off in the last two weeks."

"The results of those auctions, which have not been disclosed, would provide an important benchmark of what New Century’s assets and loan portfolios are worth, said analyst Zach Gast. 'The bids for the loans put up for auction will provide a pretty good estimate of how much debtholders will be hurt,' Mr. Gast said."

The Associated Press. "'New Century's failure raises the very real risk that the problems facing the subprime sector will spread into the broader mortgage market,' said Octavio Marenzi, CEO of Celent, a Boston-based financial research and consulting firm."

"'Relatively lax lending standards were by no means limited to subprime lenders, and problems could easily spread to the broader banking sector,' he said."

From Business Week. "The fall of the industry's biggest player to date underscores the market's tough posture toward the whole field in the current era of rising defaults and shaky housing prices."

"'I would say to you that no matter what a NovaStar or a New Century might say to me, I don't think I'd be reassured,' says Theodore Kovaleff, a senior bank and thrift analyst at Sky Capital."

The Kansas City Star. "H&R Block said Friday that problems in the nation’s troubled subprime mortgage market prevented it from meeting a self-imposed March target for selling its Option One Mortgage Corp. unit."

"'Clearly they’re in advanced negotiations, but it’s a moving target because of the meltdown in industry,' money manager David Roberts told Bloomberg Market News. 'Although it’s very disappointing they didn’t announce the deal today, I’m encouraged by the shares not tanking,' Roberts said."

"Michael Millman, a longtime analyst of Block, called the announcement disappointing. 'We think (Block) lost credibility by waiting to the last minute to confirm what many thought,' Millman wrote."

"Moody's Investors Service put the credit ratings of H&R Block's mortgage-lending unit on watch for a possible downgrade, citing problems in the subprime mortgage industry."

"'While a sale of Option One could still occur soon, the timing is more uncertain,' said Brian Harris, senior vice president at Moody's. 'We expect subprime lenders to be pressured for the rest of 2007 and very possibly into 2008 as well.'"

From Fitch Ratings. "As the U.S. subprime market stresses continue to materialize, 2005 and 2006 vintage structured finance (SF) CDOs will be under greater ratings pressure as they have substantially larger concentrations of subprime RMBS, according to Fitch analysts."

"Ratings volatility arising from later vintage subprime RMBS will likely be experienced in 12-18 months as the actual loss experience becomes clearer, according to Senior Director Derek Miller."

"'Though 2006 performance will be very poor, Fitch's more immediate concerns focus on near-term ratings volatility that will arise from earlier vintage subprime RMBS,' said Miller."

"For years, political leaders touted rising homeownership rates as a sign the 'American Dream' was being fulfilled but more than a million looming foreclosures have called the dream into question."

"'We no longer have a problem with loan availability ... but a lot of our homeowners are one crisis away from losing their home,' said Hope Wilson, a housing counselor in inner-city Cincinnati."

"After stagnating at about 65 percent for much of the 1960s, '70s and '80s, the U.S. homeownership rate has risen slowly in the past 15 years to nearly 69 percent."

"But with an estimated 1.5 million homeowners facing foreclosure this year, Congress is now looking at tighter lending standards to protect unwary Americans from taking on loans they cannot afford."

"Credit counselors facing a tidal wave of panicked homeowners say many should not have taken out, or qualified for, a home loan in the first place."

"'Everyone wants immediate gratification. All they think is 'I want this house now,' said Joann Brady, director of the nonprofit Home Ownership Center of Greater Cincinnati. 'The lender was looking only at the bottom line. The client was not reading the documents. It's both of their fault.'"

"'We shouldn't make believe we're helping people into homeownership by giving them a predatory product that creates a temporary homeownership,' said John Taylor, president of the National Community Reinvestment Coalition. 'Two years down the road they are on the street and... in a much worse position.'"

"'Is it paternalistic? Call it what you want. I don't care, I'm not running for office. I just want to keep people in homes they can really afford,' Taylor said."