Some housing bubble news from Wall Street and Washington, Bloomberg. "GMAC LLC, the finance company partly owned by General Motors Corp., said it had a $305 million first- quarter loss and injected $1 billion into its home-lending unit amid a 'sharp downturn' in the U.S. mortgage market. GMAC's Residential Capital LLC lost $905 million. GMAC's loss reflected ResCap's drain as delinquencies on so-called subprime loans climbed to a four-year high."

"ResCap also will report a loss this quarter, CFO Sanjiv Khattri told analysts."

"CEO Eric Feldstein said in the statement that 'in light of the major setback incurred by ResCap, we have already undertaken measures to significantly mitigate risk,' including paring its subprime loan portfolio and writing fewer loans to people with poor credit."

"Credit-default swaps based on $10 million of the company's bonds jumped as much as $16,000 to $191,000, the largest increase in two months."

The Star Tribune. "The three top credit-rating agencies downgraded their outlooks for Residential Capital after the Bloomington mortgage company said Wednesday that it lost nearly $1 billion in the first quarter because of bad subprime loans."

"S&P, Fitch Ratings and Moody's Investors Service all cut their outlooks on the company's ratings to 'negative" from 'stable.'"

"'Although the company's exposure to this [subprime] business has diminished significantly, the effects of higher delinquencies and depressed asset valuations continue to linger,' Fitch Ratings said."

The Dealbreaker.com. "The US subprime market claims another victim. Dillon Read, the hedge fund started by UBS just 2 years ago, is being shut down by the Swiss bank after incurring 150 million francs in losses primarily from the subprime market. UBS does plan to pay an additional $300mm in shut down costs."

"This is seen as UBS’ largest hedge fund gaffe since LTCM in 1998, when the bank incurred almost $700mm in losses."

From MarketWatch. "CFO Clive Standish said Dillon Read contributed a loss of 150 million francs from its trading in the U.S. mortgage market, where conditions have been difficult since the subprime-mortgage market collapsed."

"Morgan Stanley downgraded UBS to underweight from equal weight, saying the decision to close Dillon Read could lead to 'organizational turbulence.'"

"Title insurer and mortgage-data firm First American Corp. said that for 2007 it expects a 'continued slowdown in housing activity and an increase in defaults and foreclosures.'"

The Associated Press. "The practices of mortgage lenders will come under greater scrutiny Thursday, as two senators will unveil a plan to address rising foreclosures and high-interest rate home loans given to people with weak credit."

"Sen. Charles Schumer along with Sen. Sherrod Brown will introduce legislation to strengthen standards that mortgage lenders use when providing loans."

"The new legislation, which comes amid growing calls for Congress to enact an anti-predatory lending law, could affect big lenders such as Washington Mutual Inc., Wells Fargo & Co. and Countrywide Financial Corp., which could be forced to evaluate whether a borrower meets federal standards before issuing a loan."

"Schumer said last month that hundreds of millions of dollars in new federal aid may be needed to assist homeowners at risk of foreclosure. Presidential candidate Sen. Christopher Dodd, who is chairman of the Senate Banking Committee, said last month he is 'not interested' in a bailout."

From Reuters. "The two largest mortgage lenders in the United States have declined to endorse a set of principles that would help troubled subprime borrowers avoid foreclosure, a lawmaker who proposed the principles said on Wednesday."

"Representatives from Countrywide Financial Corp. and Wells Fargo & Co. both attended a mid-April 'subprime summit' organized by the chairman of the Senate Banking Committee, but those companies did not endorse the seven principles, which were formalized after that meeting."

"A spokesman for Wells Fargo said the company 'believes that many of the points raised at the summit are especially important, and also describe long-standing practices' at Wells Fargo. However, the spokesman would not explain why Wells Fargo did not fully endorse the principles."

"The seven principles are meant to aid borrowers and save them from foreclosure, according to a statement from Dodd's office."

"Among the principles, mortgage servicers should seek to modify the terms of subprime loans before the interest rates are reset higher, and they should set aside dedicated resources and staff to help those borrowers."

"Another principle calls for servicers to make early contact with subprime borrowers with adjustable-rate mortgages to determine if they qualify for a more stable loan."

The Atlanta Business Chronicle. "Haverty Furniture Cos.' profit dropped 84 percent in the first quarter, hurt by the national housing slump, lower sales volumes and negative comparable-store sales."

"CEO Clarence H. Smith noted the negative impact of the housing slowdown. 'The housing sector, which is tied to our industry, has been in a severe slump,' he said."

"More than a third of all U.S. home builders are vulnerable to rating downgrades over the next two years as a downturn in the housing market lingers, data released by Standard & Poor's this week showed."

"'The sector is now about one and a half years into what we believe may be a roughly three-year downturn,' S&P said in a report. 'Our home-builder rating bias is emphatically negative, as the sector is in the midst of an inventory correction of uncertain, and potentially protracted, duration.'"

"About 13 percent of U.S. home builders were on review for a possible downgrade by S&P at the end of the first quarter."

"Ratings weakness is concentrated in junk-rated home builders. While investment-grade home builders appear to have adequate liquidity, 'we will be looking for these companies to pare their inventory and demonstrate an ability to operate profitably at lower volumes,' S&P said."

From Business Week. "Maybe you guessed it, but now it's official: The housing market has not hit bottom. Poor home sales in cold-and-quiet February may be excusable; but in March, April, and May, they are a sure sign of distress."

"The latest numbers indicate that the spring of 2007 will go down as one of the worst real estate seasons in years."

"March, April, and May are traditionally the strongest months for home sales. But this year, the usual throngs of spring buyers just aren't there. On May 1, the National Association of Realtors reported that home sales closed in April will remain soft, with some drag possible into May."

"'March [home sales] weren't anywhere near where they should have been, but April is going to be the month that reveals that things really aren't good,' says Pat McPherron, housing economist for Moody's Economy.com. 'If April doesn't go well, then that's it. This is the market.'"

"Tighter lending standards are only part of the problem. 'Even if they kept [standards] the same you wouldn't get the same recovery,' says McPherron, noting that house prices accelerated faster than incomes during the housing boom."

"McPherron says he wouldn't be surprised if home sales were still soft well into the summer months. 'Many people think, 'if I can just hang on 'til the spring,' they will get an offer,' says McPherron. 'This spring, they'll be lucky to sell.'"