Some housing bubble news from Wall Street and Washington. "Purchases of new homes in the U.S. unexpectedly surged in April by the most in 14 years, ignited by the biggest decline in median prices since 1970. Compared with a year earlier, new home sales were down 11 percent, today's report showed."

"The median price of a new home dropped 11 percent last month, the biggest decline since 1970, to $229,100 from $257,000 a year earlier, today's report showed."

The Associated Press. "The drop in median prices in April compared to March was a record one-month decline. If the April sales price was compared to the sales price a year ago, the decline was 10.9 percent, the biggest year-over-year drop since 1970."

"Luxury homebuilder Toll Brothers Inc. said Thursday its fiscal second-quarter profit fell sharply, as the company took hefty charges to write down property values amid continued weakness in the housing market."

"For the three months ended April 30, net income dropped to $36.7 million, from $174.9 million a year ago."

"'We continue to operate conservatively in the current difficult climate,' said Robert I. Toll, CEO. 'In the past year we have trimmed our lot position by 28 percent from our high of 91,200 lots to our current 65,800 lots.'"

"Second-quarter net signed contracts fell 25 percent to $1.17 billion from $1.56 billion a year earlier. The company signed 2,031 contracts, before cancellations, in the latest period, a 14 percent decline year-over-year."

From MarketWatch. "Toll said second-quarter net income included pre-tax land write-downs of $119.7 million."

"The company declined to supply a full-year profit outlook. 'Given the uncertainty surrounding sales paces, and market direction and, thus, the potential for and size of future impairments, we are not comfortable giving full earnings guidance at this time,' added Joel Rassman, chief financial officer."

"Banc of America Securities analyst Daniel Oppenheim, in a research note Thursday morning, said he expects additional pre-tax land impairments of $225 million this year, based on continued declines in margins."

"'In addition, we believe Toll's more recently purchased communities, which are not yet opened, face greater risk for impairment due to a likely higher cost basis, as a majority of impairments to date have come from operating communities,' the analyst wrote."

"'Many of our communities are on sites in locations that are difficult to replace and in markets where approvals are increasingly difficult to achieve,' Toll said. 'We believe that many of these communities have substantial embedded value, realizable in the future, that should not be sacrificed in the current soft market.'"

From Bloomberg. "KB Home, the Westwood-based builder that has had two years of falling profit, said Wednesday that it agreed to sell its French subsidiary. KB Home CEO Jeffrey Mezger wants to quit France, where the firm has operated since 1968, to focus on weathering the worst slump in demand in the U.S. for new homes in 16 years."

"Rising prices, higher borrowing costs and reduced tax breaks linked to investment in rental accommodation have caused French housing starts to decline as developers report rising inventory and slowing demand. Housing starts dropped 6.7% in the first quarter from a year earlier."

"Banks need to know a potential borrower's real, not stated, income when a subprime loan is applied for, a top U.S. banking regulator said Wednesday, as problems in the subprime mortgage market persist."

"'What we need to make clear,' said Comptroller of the Currency John Dugan, 'is the principle that a lender, in underwriting a mortgage loan, must assess not just a borrower's will to make timely payments on the loan, but also his or her capacity to do so.'"

"For a lender to know a borrower's capacity to repay a loan, he said, 'the lender generally needs to know the borrower's income, and I mean real, documented income, not a number that the borrower or loan originator can pull out of the air.'"

The Wall Street Journal. "Borrowers often see mortgage brokers as their allies. But many brokers are making it clear they don't see things that way. They are fighting efforts by federal and state politicians to impose a fiduciary duty on them to put their customers' interests first."

"'The mortgage broker does not represent the borrower,' says Chris Holbert, president of the Colorado Mortgage Lenders Association. 'We sell access to money.'"

"Borrowers eyes 'are glazed over with all the paperwork,' says Jeff Lazerson, president of Mortgage Grader Inc., a mortgage broker in Laguna Niguel, Calif., that sets a fixed fee in advance for clients. Their confusion, he says, gives unscrupulous brokers 'a license to lie.'"

From Reuters. "Jobless subprime mortgage specialists are looking for employment in the booming market for loans to senior citizens, mortgage market executives said on Tuesday." "Between 12,000 to 15,000 displaced mortgage lenders may begin to seek employment in the growing market for reverse mortgages, an increasingly popular home equity loan for homeowners who are 62 years old or older, Goldman, Sachs & Co. and Wells Fargo Home Mortgage executives said at a mortgage conference."

"Some bankers worry the market's rapid growth may make reverse mortgages vulnerable to fraud and increased litigation, which has plagued subprime loans, mortgages to those with weak credit histories."

"'As you look at what's going on in the subprime market, are those the types of folks who are really appropriate for pursuing reverse mortgages?' asked Rolf Edwards, a VP at Goldman, Sachs & Co."