Some housing bubble news from Wall Street and Washington. Forbes, "On Wednesday, 1,300 home builders will call on Capitol Hill as part of a legislative conference organized by their trade group, the National Association of Home Builders. They'll do so against a grim industry backdrop."

"'For the first summer in many summers, we're not helping to keep unemployment numbers down,' says Jerry M. Howard, 51, the NAHB's CEO. 'For the first time in six years, we are a drag on the economy rather than a plus.'"

"'Our strategy is to remind policymakers of our importance in economic and societal terms,' he says, 'and to convince them to take no action that would exacerbate this downturn in the housing industry.'"

The Associated Press. "Georgia builder Meyer-Sutton Homes Inc. filed for protection from creditors Monday in the U.S. Bankruptcy Court in Newnan, Ga., the result of a 'sudden and dramatic' decline in business."

"'The housing market has suffered a dramatic decline in demand with the result problems of excess inventory and compressed profit margins,' (owner) James W. Buchanan said in court papers. According to its bankruptcy filing, the company has cut new construction starts to two per month from 25 per month."

"Home furnishings retailer Bed Bath & Beyond Inc. late Monday warned that its fiscal first-quarter earnings may come in below Wall Street's expectations."

"'Based upon what we have experienced and has been reported by others, the overall retailing environment, especially sales of merchandise related to the home, has been challenging,' CEO Steven Temares said."

"American Woodmark Corp. shares fell Tuesday morning after the kitchen cabinet maker reported weaker-than-expected fiscal fourth quarter sales, and forecast a smaller fiscal 2008 profit than analysts expected."

"'Given management's core sales forecast, it appears this rough patch will continue well into fiscal year 2008,' said analyst Peter Lisnic."

From Reuters. "Bonds backed by residential mortgages that can be 'modified' to stave off foreclosure may get lower ratings since the changes may result in reduced protection for debtholders, Fitch Ratings said on Monday."

"'After the servicer modifies the loan, the loan is shown as current. Our concern is it's still a pretty high-risk loan,' Fitch analyst Glenn Costello said."

The San Francisco Chronicle. "When borrowers run into trouble, repayment and forbearance programs are still the most popular loss-mitigation strategies. Loan servicers are offering them in 50 to 75 percent of cases, Fitch says. Nevertheless, servicers report that 'repayment and forbearance plan effectiveness is decreasing.'"

"Servicers also told Fitch they are having a harder time contacting borrowers who are delinquent or likely to be when their adjustable-rate mortgages reset. One probable reason is that more people today have caller ID and can avoid answering calls from creditors, says Diane Pendley, a Fitch managing director."

"Also, many people who took out subprime loans in the last few years did not have to document their income. They might be afraid they would have to prove it now. 'The servicers are trying to convince them' that won't happen, says Pendley."

"A bigger problem: To get a lower interest rate, some borrowers said they were planning to live in a home they were really buying to rent or flip. For obvious reasons, they don't want a servicer showing up at the door."

"Despite the Fitch forecast, people who work with troubled borrowers are not seeing a big increase in modifications yet. 'We have seen 35 cases in the last six months where folks are in a subprime mortgage that is about to adjust and would like a modification,' says Jane Duong, homeownership program manager with the Mission Economic Development Agency in San Francisco."

"'A few of them, less than five, got a forbearance or repayment plan. I have yet to see loan terms modified,' she says."

"Duong says the main reason servicers can't modify a loan is because it is in a security that prevents or severely limits a servicer's ability to alter terms. Fitch says tax laws and accounting rules also might prevent some modifications."

The New York Post. "A big hedge fund on one whopper of a winning streak is picking a bitter fight with Bear Stearns over whether renegotiating loans for homeowners struggling with subprime mortgages is fair play."

"At issue is the motivation behind efforts by Bear's EMC Mortgage unit to renegotiate subprime home loans, and whether it's solely to prevent homeowners from losing their houses, or, as Paulson's general partner John Paulson told The Post, simply 'to artificially inflate the value of derivative securities.'"

"Federal Reserve Chairman Ben Bernanke predicted Tuesday the economy will rebound from an anemic performance at the start of the year even if the housing slump continues."

"The Fed chief did make clear once again that the painful residential real-estate bust, which started last year, 'appears likely to remain a drag on economic growth for somewhat longer than previously expected,' he said."

"Residential construction will likely remain 'subdued for a time' until builders can pare down a backlog of unsold new homes, he noted. But, thus far, the problems in the housing market haven't spread through the broader economy in a significant way, Bernanke said."

"'We have not seen major spillovers from housing onto other sectors of the economy,' he observed."

"Bernanke acknowledged that problems in the subprime market can be traced in part to loose standards, which in some cases allowed people to get mortgages with little documentation. Facing criticism from Congress about lax regulation in the subprime arena, Bernanke again said the Fed will consider tougher rules to crack down on abusive practices and improve disclosure."

From MarketWatch. "Bernanke devoted most of his speech to developments in the housing market. A close reading of data on the housing market indicates that demand for housing weakened over the first four months of the year, he said."

"Housing prices remain quite soft, but for the most part outright price declines have been concentrated in markets 'that showed especially large increases in earlier years,' Bernanke noted."

From Bloomberg. " Economists say Fed policies contributed to the housing boom and bust. Former Chairman Alan Greenspan, Bernanke, at the time a Fed governor, and others were concerned in 2003 that deflation could hit the U.S., as it did Japan for a seven-year period. They cut the key rate to 1 percent and held it there for a year."

"When they did raise rates, from June 2004, the Fed committed to a 'measured' pace of a quarter percentage point per meeting. That helped 'hold down long-term interest rates,' said Brian Sack, who as a Fed staff economist in 2004 helped Bernanke research the effect of communication on interest rates."

"As borrowing costs stayed low even as economic growth accelerated, home-buyers took on a record amount of mortgage debt. From 2004 to 2006, lenders wrote a $2.8 trillion in new home loans, unprecedented for any three-year period."

"'The Fed was too easy for too long,' said Ethan Harris, chief U.S. economist at Lehman Brothers and former New York Fed staff economist. The Fed's gradual pace of lifting rates 'contributed to the lack of bite from monetary policy.'"

The Star Tribune. "A trick that some borrowers have used to boost their credit scores is about to lose its punch. Fair Isaac Corp. won't include the practice of including 'authorized account users' when it calculates its FICO credit scores."

"Lenders are increasingly worried that the practice artificially boosts FICO scores, making it harder for lenders to determine whether borrowers are good credit risks. Experts suspect inflated credit scores are at least partly to blame for the recent rash of delinquencies in the subprime mortgage market."

From Broker Universe. "Two more managers for All Fund Mortgage have stepped forward and told National Mortgage News that they have not been paid in several weeks. (Typically, All Fund used to pay within 48 hours.)"

"One manager, requesting anonymity, said she has not been paid since April and is owed close to $8,000. 'They are not returning my phone calls or e-mails,' said the manager who is based in the South."