Some housing bubble news from Wall Street and Washington. "Builder confidence in the condominium housing market eroded significantly in the first quarter of 2007, according to the latest results of the Multifamily Condo Market Index, released today by National Association of Home Builders. The component of the MCMI that tracks current conditions in the condo market stood at 23.1, down nearly 14 points from this time a year ago."

"A rating of 50 generally indicates that the number of positive responses is about the same as the number of negative responses."

"'There’s heavy excess inventory and now the shakeout in the subprime mortgage market has taken its toll on the for-sale side of the multifamily housing market,' says NAHB Chief Economist David Seiders. Seiders noted that, in many instances, multifamily developers who had begun for-sale projects are switching gears and delivering new rental apartment communities instead."

From Reuters. "Citing a difficult market for home builders, Pulte Homes Inc said on Tuesday it would cut 16 percent of its work force, adding to previously announced job cuts. Pulte Homes said it expects a pretax charge in the current, second quarter of $40 million to $50 million related to the job cuts."

"The company said it aims to reduce costs and improve operating efficiencies amid a 'challenging operating environment that continues to exist in the U.S. homebuilding industry.' Responding to the broad housing slowdown, Pulte Homes cut approximately a quarter of its work force in 2006 and earlier this year."

"'The homebuilding environment remains difficult and our current overhead levels are structured for a business that is larger than the market presently allows,' Richard Dugas, Jr., CEO of Pulte Homes, said in the statement."

"At least three major U.S. home builders suffering from the housing slump may violate contracts that govern bank credit facilities, Standard & Poor's analysts said on Tuesday."

"Centex Corp., D.R. Horton Inc. and Pulte Homes Inc. are three of six home builders whose debt rating outlooks were revised on Thursday to negative from stable by S&P. The three are 'all close' to breaking covenants, S&P analyst Jim Fielding said on a conference call."

"The home builders are mostly sapped by excess inventories as cooling home-price appreciation and tightening lending standards curbed sales, the analysts said. 'We're operating under the assumption that another shoe could drop (in the U.S. housing market) and become more severe,' Fielding said."

From Bloomberg. "After years of easy profits, a chain reaction of delinquency, default and foreclosure has ripped through the subprime mortgage industry, which originated $722 billion of loans last year. Since the beginning of 2006, more than 50 U.S. mortgage companies have put themselves up for sale, closed or declared bankruptcy, according to data compiled by Bloomberg."

"The pain has only just begun. As home prices sink and mortgage defaults climb, bond investors who financed the U.S. housing boom stand to lose as much as $75 billion on securities backed by subprime mortgages, according to Pacific Investment Management Co."

"The imprint of 'Secured Funding' is all that remains of the corporate logo that once graced the outside of the two-story building. What little remains of Secured Funding, which specialized in home equity loans, or second mortgages, to people with lousy credit, is now housed in a building across the near-empty parking lot, where a receptionist tells a caller: 'Our wholesale division is closed. We're no longer doing business with brokers.'"

"'Even with explanations, most borrowers didn't really understand what types of loans they were getting,' says Maureen McCormack, (a) former Secured Funding employee. 'They just cared about the monthly payment.'"

"Dane Marin, who worked at Secured Funding for a year, says managers harangued everyone. 'If you weren't on the phone very long, you'd get an e-mail saying, 'Get your head out of your ass,' he says."

"At times, Secured Funding salesmen broke the rules, according to at least three lawsuits filed last year in federal courts in St. Louis and Milwaukee. In one case, Secured Funding sent the plaintiff a 'personalized Platinum Equity Card' offering '$50,000 or more in cash' just for calling Secured's toll-free telephone number."

"However the leads came in, Secured Funding's salespeople made sure the fish stayed on the hook. 'You would say anything to get the loan through,' says Cristopher Pike, who worked at Secured in 2005 and '06."

"Many subprime sales techniques are now spilling out in the lawsuits, advocacy reports and Congressional hearings that predictably follow such industry meltdowns. Several lawsuits illustrate the lengths to which the big wholesalers, and ultimately Wall Street, were able to outsource the selling of the loans as far down the chain as possible."

"Mortgage investors dealing with the fallout of the subprime crisis are facing an old nemesis: rising Treasury yields."

"As a result, the Treasury market faces increased selling pressure as mortgage investors, who typically use U.S. government bonds or interest rate derivatives to hedge against effects of changing mortgage rates, are instead selling Treasuries to counter the impact of higher rates on their mortgage investment."

"'There'll be pressure to sell more as yields head up,' said Richard Gordon, fixed-income market strategist at Wachovia Securities. 'This low volatility environment has left some of these players unhedged.'"

"The mortgage sector may be a catalyst for higher Treasury yields, Deutsche analysts said. More homeowners with adjustable-rate mortgages will likely switch to fixed-rate ones in the coming months when ultra-low teaser rates on their adjustable loans expire, they said."

"The pressure on Treasury yields would be compounded if the 10-year yield hit 5 percent, some analysts said. 'There could be some pain at 5 percent,' said Wachovia's Gordon."