Some housing bubble news from Wall Street and Washington. CNN Money, "Home prices are expected to finish down for the year, the National Association of Realtors said Tuesday, which would mark the first drop since the group started tracking values in 1968. According to Lawrence Yun, a senior economist for NAR, speculative investing in real estate, which contributed to abnormal price growth for several years, has all but disappeared in the present market."

"'Home buyers today are purchasing for the long-term, generally with a realistic expectation of modest gains over time,' Yun said."

From Reuters. "The group, which has cut sales and price forecasts for several months in a row, to reflect deteriorating market conditions, said the median price for an existing home would slip 1.0 percent in 2007 to 219,800 this year. Last month, the group predicted a 0.7 percent price decline, its first nearly 40 years of record-keeping."

From MarketWatch. "'If it weren't for a favorable economic backdrop, housing would probably have a hard landing,' said Lawrence Yun, senior economist for the NAR. 'As it is, we see this as a soft landing with home sales rising gradually in the second half of the year and prices recovering a bit later.'"

"For nearly a decade, investors were rushing to real estate. Federal tax deductions and housing programs also fueled the boom."

"Even established lenders of high-quality mortgages lost their compass and chased bad business as competition increased, said Angelo Mozilo, CEO of the largest U.S. mortgage lender, Countrywide Financial Corp."

"Mozilo said he saw the industry's long-established standards come unglued in the face of new competition. 'I've been doing this for 54 years,' Mozilo recently said. For many years, he said, 'standards never changed: verification of employment, verification of deposit, credit report.'"

"But then new players came in with aggressive lending policies. Names like Ameriquest, New Century, NovaStar Financial and Ownit Mortgage Solutions set a new, lowered standard, changing the rules of the game, Mozilo said."

"'Traditional lenders such as ourselves looked around and said, 'Well, maybe there's a (new) paradigm here. Maybe we've just been wrong. Maybe you can originate these loans safely without verifications, without documentation,' Mozilo said."

"Bill Dallas, CEO of Ownit, the nation's 20th-largest subprime lender in 2006, said he saw the handwriting on the wall in April 2005 after he overheard a rival account executive tell a customer how to get a better rate by committing occupancy or income fraud."

"'I just went, 'We are hosed as an industry,' Dallas said. 'I told our guys, 'We're the problem.'"

"A former CEO at a failed subprime lender, who asked to remain anonymous as his company unwinds, said as long as Wall Street was willing to buy the risky loans and package them into securities, the market was going to create them."

"'You act very differently when you know somebody is willing to buy the loans,' the executive said."

The Washington Post. "Maggie Hardiman cringed as she heard the salesmen knocking the sides of desks with a baseball bat as they walked through her office. Bang! Bang!"

"'You cut my [expletive] deal!' she recalls one man yelling at her. 'You can't do that.' Bang! The bat whacked the top of her desk. As an appraiser for a company called New Century Financial, Hardiman was supposed to weed out bad mortgage applications. Most of the mortgage applications Hardiman reviewed had problems, she said."

"'The stress in that place was ungodly. It was like selling your soul,' said Hardiman, who worked for New Century in 2004 and 2005. 'There was instant notification to everyone as soon as you rejected a loan. And you dreaded doing it because you paid for it. Two guys would come with a bat, and they were all [ticked] off because you cut their deals.'"

"The head of a large Wall Street bank's mortgage group contended that his firm regularly lost out on New Century's business because its due diligence process was stringent and it had been returning a high number of loans. New Century wanted the bank to ease its standards, and the issue became a source of friction between the companies."

"'The entire industry, over time, became more lax,' he said, speaking on condition of anonymity because he was not authorized to talk about his company's inner workings. 'The more [loans] you accepted, the better relationship and the better price you would have. The name of the game was definitely volume.'"

"A veteran appraiser who worked in Pearl River, N.Y., said...he quickly discovered that the place was a pressure cooker. He said he often was encouraged 'to make loans work.' His boss generally supported him when he wanted to reject a questionable loan, he said. But other office managers 'were all about the numbers just so they got their bonuses."

"Still, the veteran appraiser didn't blame them. 'They were pressured to make loans, that's how you do business,' said the man. 'They were trying to do more and more business. That's essentially what Wall Street wanted.'"

The New York Times. "Ownit filed for bankruptcy protection late last year. Gone are the lavish parties, the extravagant trips and the executive salaries and sales commissions that routinely topped a million dollars."

"What used to be a profitable partnership between subprime lenders and Wall Street banks has now degenerated into a cross-country blame game. Lenders in California say big investment banks encouraged and pushed them to make risky loans. On Wall Street, bank executives say mortgage lenders became sloppy and did not pay enough attention to fraud."

"William D. Dallas, the founder and CEO of Ownit, acknowledges loosening lending standards but says he did so reluctantly and under pressure from his investors, particularly Merrill Lynch, which wanted more loans to package into lucrative securities."

"He recalls being asked to make more 'stated income' loans, in which lenders do not verify the information provided by borrowers and brokers with tax returns, pay stubs or other documentation. The message, he said, was simple: You are leaving money on the table, do more of them."

"Mr. Dallas, who has been in the mortgage business for more than 25 years, said he disagreed, but complied. 'If I can sell it at a profit,' he said, 'why would I not do it?'"

"In retrospect, it was exactly the wrong time to ease credit: interest rates were rising and home prices were cresting after a sharp four-year rally. Many in the industry also suspected that speculation and fraud were rampant in many hot real estate markets on the coasts and in the Southwest."

The Associated Press. "Irwin Financial Corp. said Monday its first-quarter loss widened as its mortgage business felt the effects of the housing sector slump."

"The company said it did not sell some loans on the market because the prices offered were too low after buyers became more risk averse amid increased defaults and a slump on the housing market."

From Bloomberg. "U.S. homeowners entered the foreclosure process in April at more than double the rate of a year ago as tightening credit made it more difficult to refinance and a swelling supply of unsold homes made it tough to sell."

"The number of homeowners in all three phases of foreclosure rose last month over the same period a year ago, according to Foreclosures.com. Those receiving their first notice of foreclosure from a bank climbed 127 percent, those with homes going up for sale by auction jumped 164 percent and those whose homes were repossessed by banks went up 40 percent."

"According to Credit Suisse, 82 percent of subprime mortgages have an adjustable rate provision, meaning that payments start with low or 'teaser' rates and adjust to a higher rate after a set number of years."

"The subprime mortgage industry rushed so many buyers into the housing market that it opened an ownership gap, pulling in people who likely would have bought a home only years later, and that gap will stall a recovery in the sector."

"Besides favorable terms, many borrowers found low, low interest rates irresistible. Mortgage rates on 30-year loans set new records almost every week through early 2003."

"'That did pull housing demand from the future into the present,' said David Seiders, chief economist with the National Association of Home Builders. 'When all that demand supply pressure started to push prices up, the whole thing died under its own weight.'"