Some housing bubble news from Wall Street and Washington. Associated Press, "Mortgage defaults are slamming the savings and loan industry. Troubled assets, loans that are 90 or more days past due, jumped to $14.2 billion last quarter, up from $9.2 billion in the same quarter last year, the Office of Thrift Supervision said. And troubled assets rose to 0.95 percent of total assets in the quarter, up from 0.62 percent in the second quarter of 2006."

"The numbers are particularly attention-getting considering that thrifts, which take in savings deposits and make mortgage loans, are not big players in the subprime mortgage sector of loans made to borrowers with riskier credit."

"Capital One Financial Corp. said Monday that it will cut 1,900 jobs and shutter its wholesale mortgage banking business. The McLean, Va.-based company will close 31 GreenPoint locations in 19 states and 'cease residential mortgage origination' effective immediately."

"'Over the past few months, we have experienced an unprecedented disruption in the secondary mortgage markets,' Capital One's CEO Richard D. Fairbank wrote in an internal memo to employees."

"GreenPoint, based in Novato, Calif., specializes in no-documentation and 'Alternative A' mortgage loans. The decision to close GreenPoint will hit the company with an $860 million charge."

The San Francisco Chronicle. "Headlands Mortgage was founded by Larkspur's Peter Paul in 1986. Paul took the company public in 1998 and it merged with GreenPoint in 1999. Paul is considered by some to be the father of the mortgage market that serves the gap between prime and subprime."

"'These are strange times,' Paul told The Chronicle. 'In the last month there's been a major change in liquidity for mortgages.'"

From Reuters. "Struggling subprime mortgage lender Accredited Home Lenders Holding Co on Tuesday said it agreed to sell $1 billion of home loans to an unnamed investor, a move it said would limit its exposure to margin calls."

"'If the market improves to a rational level, our intention is to repurchase these quality loans by mid-November and sell or securitize them,' CEO James Konrath said."

"Washington-based private-equity firm Carlyle Group has been forced to lend money to Carlyle Capital Corp. Ltd., a highly leveraged fund listed in Amsterdam that invests in residential mortgage-backed securities, to meet margin calls."

"In a statement Tuesday, Carlyle Capital said Carlyle Group has extended a $100 million one-year loan to help it fund itself, and that it has already tapped the loan for $10 million."

"The move underscores how sharp drops in the market value of asset-backed securities have raised financing costs for funds and institutions using these kinds of securities as collateral."

"Carlyle Capital CEO John Stomber in a statement said the fair value of these assets has declined, 'due to diminished demand for these securities in the market.'"

"At its listing, the company said it would set aside a liquidity cushion of around 20 percent, or about $176 million, 'to meet reasonably foreseeable margin calls.'"

From Bloomberg. "Dexia SA, which owns U.S. bond insurer Financial Security Assurance Holdings Ltd., (saw) shares fall after CEO Axel Miller said he expects 'months of uncertainty' in the markets as the U.S. subprime loans debacle hurts more financial companies. 'There is a lack of knowledge about who is exposed and for how much,' Miller said in an interview today."

"'There's a crisis of confidence, notably among financials,' said Franck Hennin, a fund manager at Richelieu Finance in Paris, which oversees $5 billion in assets. 'We're having trouble estimating the damage for financial companies.'"

"Marsh Inc. the world's largest insurance broker and risk adviser, on Monday warned financial institutions they may face more claims as a result of the subprime mortgage crisis."

"Marsh said in a statement that insurers, banks and rating agencies could face greater liability claims under directors and officers and errors and omissions policies."

"'Although this market has been largely stable, if there are a high number of costly claims, the trend may reverse and costs rise,' said Siobhan O'Brien, a senior VP of Marsh."

"Countrywide Financial Corp., the largest U.S. mortgage lender, has already seen several lawsuits. Attorneys in the insurance industry agreed with the Marsh study. 'This is a big deal,' said James Wood, co-chair of the insurance practice at LeBoeuf, Lamb, Greene & MacRae in San Francisco. 'We expect this to grow in terms of litigation.'"

From CNN Money. "Job cuts have begun at Bear Stearns and that could mark the start of a broader wave of layoffs across Wall Street as firms survey the damage caused by the recent downturn in financial markets. Some 240 employees at a Bear Stearns lending unit were laid off Wednesday, according to a company spokesperson."

"Alan Johnson, managing director of a New York compensation consulting firm, expects layoffs in the mortgage and structured products divisions of the big banks before the end of the year."

"Instead of splurging on Ferraris and fine art, Wall Street professionals may want to start saving. Johnson expects bonuses to start falling, by as much as 10 to 15 percent, in 2008, although others say it's still too early to forecast a downturn."

"'A lot of the problems in subprime and mortgages, most of that is not going to show up until next year,' said. That's also when financial losses from loan-related write offs will start to pressure firm wide compensation at the brokerages."

"The credit crunch triggered by a rout in the U.S. subprime housing market doesn't pose a 'systemic' threat to banks, Moody's Investors Service said."

"The Moody's statement comes as it, Standard & Poor's and Fitch Ratings come under criticism from fund managers and politicians who say the companies failed to provide timely warnings to investors about problems in the subprime market."

"The credit assessors must 'shoulder some responsibility' for the subprime debacle, Senator Richard Shelby said this week. Credit-rating companies face congressional scrutiny for an 'inherent conflict' in helping construct loan-backed securities, then issuing ratings on them, Shelby said."

"Global financial markets and the world economy are at 'panic stations,' HSBC Holdings Plc, Europe's biggest bank by market value, said in a report published yesterday."

"'Should the panic exhibited over the last few days turn into revulsion, the markets may never be the same again,' wrote HSBC economist Stephen King and strategist Richard Cookson. 'The implied liquidity drain might leave the financial system, and the broader economy, more vulnerable than we currently believe.'"

"Moody's said the banking system may be more dependent on 'episodic liquidity assistance' from central banks than originally thought."

The Denver Post. "Federal Reserve Chairman Ben Bernanke repeatedly told us our subprime woes would not spill into the broader U.S. economy. Now, the Fed is sandbagging the levee."

"So why is the Federal Reserve so busy managing our economy? Or is it simply bailing out a bunch of high rollers who made bad bets on subprime loans? So what if Bear Stearns, Goldman Sachs and some of the biggest investors in the world are reeling from their own stupidity?"

"Who cares if Countrywide and other major mortgage lenders go belly up because of their risky lending practices? And if you can't pay your mortgage or get a new one - well, geez, didn't you ever play Monopoly as a kid?"

"I'm not sure he's right, but I like what Richard X. Bove, a Florida-based analyst with New York investment-banking firm Punk, Ziegel & Co., had to say."

"In a report cited by Bloomberg News, Bove opines that the Fed's move may prevent a 1987-style stock-market crash, but it may also start a 1973-style recession. 'I believe that the Fed acted precipitously to protect monied interests and bad business policies,' he wrote. 'It may have certified rather than prevented a recession.'"

"Earlier this year, a Wisconsin couple won a judgment against Chevy Chase Bank that said the bank deceived them over the terms of their mortgage. The judge ordered Chevy Chase to rescind the loan and certified the lawsuit as class-action, which could potentially release thousands of other borrowers who felt misled."

"Chevy Chase is appealing the judgment, and did not respond for comment for this article."

"'It's a three-part business cycle now,' said Don Lampe, a partner with the law firm Womble Carlyle, whose specialty is mortgage matters. 'Boom, bust and recrimination. We're moving into the recrimination phase.'"

"'Most claims will be against mortgage brokers for putting them into loans where they shouldn't have been,' said Dan Mulligan, a California-based real estate attorney."

"Aside from bad advice, out-and-out lying also seems to have added to the mess. Borrowers often exaggerated income in order to qualify for larger loans. 'We're running into stated-income loans where brokers got borrowers to sign blank forms that the brokers filled in; they often did not accurately reflect the borrowers' incomes,' said Michael Seng, a professor with the John Marshall School of Law."

"Richard Hagar, a veteran real estate appraiser and expert witness, also blames appraisers. According to him, many of them puffed up home values to make deals work. 'We saw some really Mickey-Mouse things,' he said, 'A $200,000 house would come in at $300,000. When appraisers puff up values, they can be sued; I heartily recommend it.'"