Some housing bubble news from Wall Street and Washington. Bloomberg, "Builders in the U.S. unexpectedly started work on more homes last month while permits for future construction fell to the lowest level in a decade, suggesting a recovery from the housing slump may not be quick."

"Housing starts rose 2.3 percent to an annual rate of 1.467 million, led by an increase in apartment buildings, the Commerce Department said today in Washington. Building permits fell 7.5 percent to a 1.406 million rate."

"A glut of unsold homes suggests the slump is not over. There were enough homes on the market in May to satisfy 7.1 months' worth of demand at the current sales pace, the government said last month. The supply of existing homes was 8.9 months, the most in almost 15 years."

The Associated Press. "Home builder Pulte Homes Inc. said Tuesday it expects to report a hefty loss from continuing operations for the second quarter, due to large charges and a worsening consumer environment."

"Pulte said Tuesday that it expects to record impairments and land-related charges...to reflect the decreased value of unsold homes on its books and for walking away from deposits on land it no longer wants to buy."

The Street.com. "The loss comes as Pulte's orders for the second quarter slid 20% from a year earlier to 7,532 homes. The company closed on 5,938 homes during the period, a drop of 40% over the prior-year quarter."

"'The difficult conditions that plagued the homebuilding industry in the first quarter of 2007 worsened in the second quarter, with increased competitive pricing pressures, elevated levels of new and resale home inventory, and weak consumer sentiment for housing affecting the entire industry,' said Richard Dugas Jr., CEO of Pulte Homes, in a press release."

"Shares of Novastar Financial Inc. continued plunging Wednesday amid doubt a $150 million injection of cash will be enough to sustain the mortgage lender.""

"Friedman Billings Ramsey analyst Scott Valentin called the $150 million cash injection a 'Hail Mary.' He said he does not think it will be enough 'to ensure NovaStar's viability, barring a significant improvement in subprime capital markets conditions.'"

From Reuters. "Alliance Bancorp Inc. has filed for Chapter 7 bankruptcy protection and will liquidate, becoming the latest residential mortgage lender to collapse in the U.S. housing downturn."

"Alliance differed from most struggling lenders in that it specialized in 'Alt-A' home loans, rather than 'subprime' loans that have caused the greatest problems."

"JPMorgan Chase & Co. said on Wednesday it tripled the amount set aside for loan losses as even borrowers with good credit defaulted on home equity loans."

"JPMorgan Chief Financial Officer Mike Cavanagh said losses on home equity loans to prime borrowers, or those with good credit, will steepen, partly because U.S. housing prices have flattened or fallen in some areas."

"The bank set aside $1.53 billion for loan losses, up from $493 million a year earlier. The increase was driven by higher loss estimates on home equity loans where borrowers had little equity in houses whose values are falling."

"'It's definitely a change in trend that we're reacting to,' Cavanagh told reporters."

"Bear Stearns Cos. told investors in its two failed hedge funds that they'll get little if any money back after 'unprecedented declines' in the value of securities used to bet on subprime mortgages."

"'This is a watershed,' said Sean Egan, managing director of Egan-Jones Ratings Co. 'A leading player, which has honed a reputation as a sage investor in mortgage securities, has faltered. It begs the question of how other market participants have fared.'"

"Estimates show there is 'effectively no value left' in the High-Grade Structured Credit Strategies Enhanced Leverage Fund and 'very little value left' in the High-Grade Structured Credit Strategies Fund, Bear Stearns said in a two-page letter."

"The larger fund, which had $925 million of capital in March, is down about 91 percent this year, according to a person with direct knowledge of the performance, who declined to be identified because the figures aren't public. It borrowed almost $9 billion, and its remaining debt was taken over by Bear Stearns in the bailout."

"Douglas Sipkin, an analyst at Wachovia Corp., said today in a note to clients that most securities firms probably reduced the value of their mortgage assets during the first half of the year. Any holders that continue to overvalue CDOs and subprime bonds will have to mark them down to market this quarter, he wrote."

"Countrywide Financial Corp.'s bonds weakened after the largest U.S. mortgage lender reported a surge in defaults."

"Countrywide said that pending foreclosures as a percentage of outstanding loans more than doubled in June from a year earlier and delinquencies hit a six-month high."

"Downey Financial Corp. reported net income for the second quarter of 2007 of $32.7 million, down 32.1% from the second quarter of 2006."

"CEO Daniel D. Rosenthal commented, 'The ongoing softening of the housing market, coupled with a challenging interest rate environment, have contributed to continued declines in our loan portfolio and increases in our non-performing loans.'"

"Some lenders are eliminating what until recently was the most popular type of home-mortgage loan for subprime borrowers, or borrowers with weak credit histories."

"Countrywide Financial Corp., Option One Mortgage Corp. and Merrill Lynch's First Franklin Financial unit told employees and mortgage brokers this week that they would no longer offer so-called 2/28 subprime loans."

"A spokesman for Countrywide, the nation's largest home-mortgage lender in terms of lending volume, said investors' demand for such loans is 'very, very limited.'"

"The benchmark ABX index sank to record intraday lows in nervous trading on Wednesday on concerns over mounting deterioration in assets backed by subprime mortgage securities, traders said."

"The ABX 'BBB-' 07-1 index, which is tied to loans made in last year's second half, fell to 43 on Wednesday after closing at a record low of 45.02 bid on Tuesday."

The Wall Street Journal. "Moody's Investors Service says it is paying a high price for its tough stance on lax lending standards for commercial mortgage-backed securities."

"The Moody's Corp. unit said it was passed over and not hired for 75% of the commercial mortgage-backed securities rating assignments issued in the past few months as a result of its requirement that issuers add an extra layer of credit enhancement."

"Moody's said issuers are 'rating shopping,' meaning they were hiring competitors that would hand out higher ratings on securities."

"Federal and state banking regulators on Tuesday said they would step up their scrutiny of lenders that make home loans to people with shaky credit, focusing on companies that operate outside federal banking oversight."

"The pilot program announced by the Federal Reserve, two other federal agencies and state banking officials is scheduled to start in the fourth quarter and affect about 12 lenders. It will be designed to examine firms that account for the majority of subprime loans."

"The home-mortgage business exploded in recent years, with big Wall Street investment firms buying packages of loans in bulk from banks and other lenders. Critics say the Federal Reserve has been slow to use its authority under a 1994 consumer protection law to crack down on deceptive mortgage practices."