Some housing bubble news from Wall Street and Washington. "IndyMac Bancorp Inc., a big Southern California mortgage specialist, said Tuesday second-quarter profit fell 57 percent as the deepening U.S. housing slump hurt margins and loan volume, and more customers fell behind on payments."

"Lenders forced the company to buy back $219 million of loans because borrowers missed early payments, up from $48 million a year earlier. IndyMac specializes in 'Alt-A,' or 'Alternative-A,' mortgages, which fall between prime and subprime in quality."

The Street.com. "IndyMac's non-performing assets rose 342% to $516 million, while mortgage loan production fell 12% from first-quarter levels to $22.5 billion."

"'We anticipate that the second half of 2007 and 2008 will continue to be challenging for the mortgage and housing markets and for IndyMac,' IndyMac CEO Michael Perry said. 'We expect competitive pricing pressures on our [mortgage banking] margins to continue.'"

"'In addition, we expect that the current, temporary volatility and reduced liquidity in the secondary markets will adversely impact secondary market execution, putting further pressure on MBR margins.'"

The Boston Globe. "Sowood Capital Management, a $3 billion Boston hedge fund launched just three years ago by former Harvard endowment manager Jeffrey Larson, sold most of its holdings in troubled debt markets yesterday after telling investors that it had losses of more than 50 percent this month."

"Sowood told Bloomberg News last week that it did not hold any subprime mortgage debt in its portfolio. Nonetheless, it said its devalued bond holdings thrust it into a liquidity crisis and it was forced to sell securities to meet margin calls."

"Last night an investor said Sowood had told clients it had lost 57 percent of its value and was being 'completely liquidated.'"

"'A loss of this magnitude in such a short period is as devastating to us as it is to you,' Larson, said in a letter to investors. 'We are very sorry this has happened.'"

From Bloomberg. "Shares of MGIC Investment Corp. and Radian Group Inc. tumbled the most since 2002 after the two home- loan insurers said their combined stakes of more than $1 billion in a subprime mortgage company may now be worthless."

"MGIC and Radian said yesterday 'unprecedented' disruptions in mortgage markets this month may have destroyed their stakes, each valued at more than $500 million on June 30. The joint venture has received 'an unprecedented amount of margin calls from our lenders,' said today's statement."

"'I'm surprised. It's a very quick time frame to have that change in valuation,' Mark Patterson, a managing director at Los Angeles-based NWQ Investment Management, said before C-Bass's announcement. NWQ was one of the three biggest investors in both MGIC and Radian as of March 31. 'There's been incrementally bad mortgage news every day, but the magnitude of this is quite severe.'"

"Climbing monthly payments for borrowers with adjustable-rate mortgages 'forced many homeowners to default without the ability to refinance their mortgages,' Radian CEO S.A. Ibrahim said in a conference call July 25."

From CNBC. "GMAC posted a 63% decline in second-quarter profit Monday, hurt by subprime mortgage losses at its home lending unit. Results included a $254 million loss at Residential Capital LLC, or ResCap, compared with a year-earlier $548 million profit, amid what GMAC called 'severe illiquidity' in subprime mortgages, or home loans to people with weaker credit."

"ResCap slashed second-quarter U.S. nonprime mortgage production to $700 million from $6 billion a year earlier. It also kept fewer riskier loans on its balance sheet. GMAC CEO Eric Feldstein nevertheless projected that 'widespread weakness' in housing and mortgages will persist this year."

The Associated Press. "Trading in American Home Mortgage Investment Corp.'s stock remained halted Tuesday. If things grow more dire, Citigroup analyst Donald Fandetti said bankruptcy is possible. In some cases, a company in this situation would sell itself at a big discount to the value of its assets."

From Smartmoney. "The warehouse debt dealers to whom AHM used to sell its loans, the likes of Deutsche Bank, Wells Fargo and Countrywide Financial, have fewer buyers for their 'structured' products these days, and none at all interested in anything but the choicest cuts except at 50 cents on the dollar."

"Such dealers had extended $4 billion in credit to AHM, and with the securities stuck on the originator's books depreciating by the day, the warehouse crew demanded more collateral. Hence no dividends for AHM shareholders."

"'I think this could drag out into the fall,' says Paul J. Miller of Friedman Billings Ramsey. 'The issue is that the market is frozen. I don't know when it's going to get unfrozen. I think people will get comfortable with credit at some point, but we don't know how bad it's going to get. Liquidity crunches like these tend to work themselves out, but we've never seen one like this. What's going to happen is that there will be better mortgages originated, because that's the only stuff that's trading.'"

The Daily Telegraph. "Sales of bonds that finance the $US1.2 trillion ($1.42 trillion) US subprime home loan market have ground to a halt, as delinquencies by borrowers continue to rise and credit rating agencies downgrade the securities."

"'Moody's and Standard & Poor's finally got it into gear, downgrading hundreds of subprime issues and threatening more to come,' Bill Gross, manager of the world's biggest bond mutual fund."

"'When these loans reset, IO periods are over, what makes you think things are going to go favourably?' said Darcy Morrison, an analyst at Evergreen Investments. 'So the (new issue) market is kind of frozen.'"

"'Rating actions caught the attention of investors who thought that if you bought a 'AAA' rated bond that it would stay 'AAA,' said Morrison. 'Who knew it could get dinged as bad as it was.'"

"The market for new subprime bonds 'has practically ceased activity' because of the ABX sell-off and wider spreads on the underlying bonds, said Christopher Flanagan, head of ABS research at JPMorgan Securities in New York."

"Big lenders including Countrywide Financial Corp and Wells Fargo & Co have stopped offering some subprime ARMs that customers with low credit scores may rely on to save their homes. Some 40 per cent of borrowers may no longer be able to refinance before their ARMs reset to higher interest rates, Mr Flanagan wrote in a note."

The San Francisco Chronicle. "New data seem to confirm fears that Countrywide Financial is not the only lender facing problems with prime home-equity loans. Industrywide, the percentage of prime home-equity loans at least 60 days delinquent has more than doubled to 1.14 percent in May from 0.51 percent in May 2006, according to new data from First American LoanPerformance."

"Until last week, most analysts weren't focusing on the home-equity market. Countrywide's announcement was the first clear evidence that mortgage problems could spread to prime."

"'I don't think (Countrywide's announcement) should have been a surprise, but up until a month and a half ago, the majority of people were saying this was just a subprime problem,' says Joshua Rosner, managing director of research firm Graham Fisher & Co."

"Joseph Mason, an associate finance professor at Drexel University, expects to see more problems with mortgages that were disguised as prime."

"'Much of prime is not really prime. The Alt-A base (has) been found to be really subprime. And much of the subprime has turned out to be flat-out fraud,' Mason says."

"'Borrowers over-borrowed, brokers over-lent, investment banks oversold performance and rating agencies overrated (mortgage-backed securities). What we thought was quality was not quality,' he says."

"The highest level of defaults in 10 years on subprime mortgages and a $US33 billion pile-up of unsold bonds and loans for funding acquisitions are driving investors away from debt of the New York-based securities firms."

"'The market is being driven by fear,' said Mark Kiesel of California-based Pacific Investment Management, manager of the world's biggest bond fund."

"'They've got a problem,' said Daniel Fuss, vice-chairman of Loomis Sayles & Co. 'It's pretty bad. They're going to have to go back to the private equity people' to renegotiate their lending commitments, he said."

"Scott MacDonald, director of research at Aladdin Capital Management, said: 'Fundamental credit research does not mean anything at all in this environment. People are just trying to get out of the way.'"

The BBC News. "The UK housing market is slowing as interest rates begin to bite, the UK's biggest homebuilder has said. Taylor Wimpey added that short-term conditions in the struggling US housing market 'remained difficult to predict.'"

"In the US, the firm said that plunging land values in Florida and California had forced it to write down £60.9m from its books, on top of a £25m provision announced in May."

"M/I Homes Inc. said Tuesday it flipped to a second-quarter loss, including tens of millions of dollars in write-offs, as delivery of new homes fell by nearly a quarter."

"The homebuilder posted a loss of $42.6 million compared with the same period a year ago. Included in the second quarter figures are pretax charges of $72.1 million. These include $64.2 million in land-related impairment and abandonment charges."

"The company, which focuses on the Midwest, Mid-Atlantic and Florida markets, said the ongoing housing slump and falling prices make it difficult to predict demand or margins."

"Brookfield Homes Corporation today announced financial results for the second quarter ended June 30, 2007: Net income for the three months ended June 30, 2007 was $10 million, compared to $43 million in 2006. The decrease is primarily a result of fewer home and lot sales, and a decrease in the gross margin earned on housing to 18% from 27% for the same period in 2006."

"Housing revenue for the three months ended June 30, 2007 totaled $155 million, compared to $193 million for the same period in 2006. The decrease in housing revenue is primarily due to fewer home closings during the quarter in the Southland/Los Angeles market."

From MarketWatch. "Home prices in 15 of 20 major U.S. cities were lower in May compared with the previous May, Standard & Poor's reported Tuesday. The Case-Shiller 20-city index fell 2.8% compared with a year earlier, S&P said. That's the biggest decline in the seven-year history of the index."

"In 10 major cities, prices were off 3.4% from the previous year, the largest decline since 1991."

"'At a national level, declines in annual home price returns are showing no signs of a slowdown or turnaround,' said Robert J. Shiller, chief economist at MacroMarkets LLC., and the co-inventor of the price index."