Some housing bubble news from Wall Street and Washington. Bloomberg, "Toll Brothers Inc., the largest U.S. luxury homebuilder, said third-quarter profit fell 85 percent as the deepening housing slump cut sales, increased cancellations and forced the company to write down property. Cancellations jumped to 24 percent in the quarter and CEO Robert Toll said a glut of homes is curbing demand."

"Toll said today the housing market hasn't stabilized. 'We continue to wrestle with the interrelated challenges of softer demand and excess housing supply in most markets,' Robert Toll said in the statement."

"While the company has been helped during the downturn by building homes only when an order is received, 'we have experienced a much higher rate of cancellations than at any time in our 21 year history as a public company,' Toll said."

"Profit included a pretax writedown of $147.3 million for land, developments and options."

"Five of the largest U.S. homebuilders reported combined losses of $1.85 billion and took charges of $2.9 billion to write down land values and walk away from property options in their most recent quarters."

The Street.com. "'We, along with many others, are concerned about the dislocation in the secondary mortgage market,' said CEO Bob Toll. 'Tightening credit standards will likely shrink the pool of potential home buyers: Mortgage market liquidity issues and higher borrowing rates may impede some customers from closing, while others may find it more difficult to sell their existing homes.'"

From MarketWatch. "WCI Communities, the Bonita Springs, Fla.-based builder of multi-family houses, high rises and retirement homes, said it swung to a second-quarter loss of $33.2 million."

"'We believe the slowdown in new unit orders is attributable to a national softening in demand for new homes as well as an oversupply of homes available for sale, particularly in our Florida market,' WCI said, adding it has 'little or no visibility on when market conditions are likely to improve.'"

"'WCI continued to focus on reducing costs and generating cash flow in the second quarter,' said Jerry Starkey, CEO of WCI Communities."

"For the three months ended June 30, 2007, the aggregate value of Traditional and Tower Homebuilding net orders fell 96.2% over the same period a year ago to $9.1 million, while the number of unit orders declined 82.6% to 50."

"For the second quarter of 2007, the number of gross and net orders declined 43.4% and 57.4%, respectively....The cancellation rate for the second quarter of 2007 was 47.8%, up from 19.7% in the first quarter of the year. Cancellations during the quarter totaled 98."

"For the three months ended June 30, 2007, revenues in the Tower Homebuilding Division decreased 99.0% to $2.1 million from $214.4 million for the same period a year ago, primarily due to the reversal of revenue during the quarter related to reserved tower defaults as well as less progression of building percentage of completion among the towers under construction."

The Associated Press. "Accredited Home Lenders Holding Co. will slash its work force by more than half and stop accepting new mortgage applications in the U.S. as it struggles to survive in the troubled home lending industry, the company said Wednesday."

"'These difficult decisions were made out of necessity in light of the continued and widely publicized turbulence in the mortgage and financial markets' James A. Konrath, CEO, said in a prepared statement."

"In Arizona, Scottsdale-based 1st National Bank Holding Co. said it would close its wholesale mortgage unit and mortgage centers in Virginia, North Carolina and Nevada. The company said it...will lay off 541 workers."

"'I have never seen a market shift as drastically as has occurred in the mortgage business over the last four months, but even more precipitous in the last few weeks,' owner and Chairman Raymond Lamb said in a statement."

From Reuters. "First Magnus Financial Corporation, one of the largest independent American mortgage lenders, filed for Chapter 11 bankruptcy protection yesterday, becoming the latest provider of home loans to collapse as the housing market slumps."

"With plans to sell-off its Option One subprime mortgage business already set, H&R Block Inc. said Wednesday it has used $1.05 billion in credit lines to fortify operations."

"'In recent weeks, the credit markets have become increasingly constrained and unstable,' William Trubeck, H&R Block's chief financial officer, said."

"H&R Block's access to cash may be pinched because markets for its commercial paper and subprime mortgages offered by the Option One unit are at a near-standstill."

"While Cerberus Capital Management LP has agreed to buy Option One, the sale may be delayed from October to December. Hedge fund manager Richard Breeden is pressing H&R Block to 'stop the bleeding' and shut the money-losing unit."

"HSBC Holdings Plc, Europe's biggest bank by market value, will eliminate 600 U.S. jobs and close a mortgage office as it retreats from the subprime home loans that have triggered a rise in defaults."

"The London-based bank will close the mortgage-services office in Carmel, Indiana, by June 30, 2008, spokesman Michael Trevino said in an interview today. HSBC employs 60,000 people in the U.S., Trevino said."

"'It's about matching capacity with business volumes,' he said. 'It's about fat.'"

From Thisismoney. "HSBC Lloyds TSB and others are affected by the latest twist in the global credit crisis that has seen the funding for vehicles that drive their day-to-day operations dry up on the soaring cost of credit."

"UK's biggest mortgage lender HBOS admitted last night it had been forced to lend £310m to finance Grampian, its credit investment vehicle, and its rivals may be forced to follow suit. Grampian had $35.4bn in debt outstanding as of the end of May, according to Moody's Investors Service, making it the biggest issuer of assetbacked commercial paper in Europe."

"Reduced interbank lending may become a problem for Germany's banks if it persists and may require central bank intervention, the head of the eastern German savings bank association said on Wednesday."

"'We've got assets that are not very moveable for the moment. If it stays like that for long, it will become problematic,' Claus Friedrich Holtmann told a news conference."

"The comments echo those on Tuesday by state-backed lender WestLB's CEO Alexander Stuhlmann, who said Germany's banks faced a 'not uncritical situation,' with foreign banks becoming less willing to extend credit lines to them."

"From the looks of things at the newly built Aparta Hotel Residencia, you'd never know that it's the high summer tourist season in Canet d'En Berenguer, a town of 5,000 just north of Valencia on Spain's Mediterranean coast."

"The compound's 308 apartments, completed this spring, are all unoccupied. Grass has started to sprout between the red terra-cotta tiles."

"The residence is just one of a trail of buildings dotting the sandy coastline constructed by Enrique Banuelos as he amassed a fortune of more than 4 billion euros ($5.4 billion) over the past 15 years. Banuelos lost much of that money, and shareholders', as the stock market punished the firm he founded, Astroc Mediterraneo SA, amid a rapid cooling of Spain's housing market."

"Meanwhile, about 700,000 new housing units will go on sale across Spain this year, 300,000 more than projected demand, says Fernando Rodriguez de Acuna, president of R. R. de Acuna & Asociados."

"'There are about 60,000 real estate firms in Spain, and 75 percent of them are disasters that will vanish,' Rodriguez de Acuna says."

"Tightening global credit markets have taken a toll on U.S. mortgage-backed securities issued by Fannie Mae and Freddie Mac and it will take more than recent Federal Reserve measures to boost liquidity."

"While the central bank's recent move to cut the primary discount rate boosted liquidity in financial markets overall, it may be too late to help the roughly $4.25 trillion 'agency' MBS market."

"At roughly $7 trillion in size, which includes the subprime sector, the mortgage bond market is the world's largest, dominated by Fannie Mae and Freddie Mac."

"'Liquidity in the agency MBS market is not only worse than it was a few months ago, it is worse than it was a just a few weeks ago,' said Arthur Frank, director and head of MBS research at Deutsche Bank Securities in New York."

"Alec Crawford, head of MBS strategy at RBS Greenwich Capital, said there have recently been large differences between quotes on prices to buy and prices to sell agency MBS, indicative of a lack of liquidity."

"'The bid/ask spreads on mortgage bonds have certainly widened because the Street knows that a $300 million trade today is similar in risk to a billion dollar trade six months ago and that's because there's so much more volatility,' he said."

"FBR Research said on Wednesday that $150 billion to $250 billion of permanent capital is needed to normalize pricing in the depressed market for mortgage-backed securities."

"However, in a note to clients, the research arm of securities firm Friedman, Billings, Ramsey & Co Inc said the process would take up to a year and will be painful for mortgage investors and originators. FBR Research said the new capital is needed to compensate for the massive 'deleveraging' underway among companies that hold mortgages."

"More than $20 billion worth of mortgage bonds not backed by mortgage finance companies Fannie Mae and Freddie Mac have been offered for sale in the past few days."

"Mortgage investors increasingly question the underlying value of mortgage-backed securities given that orginators' lax lending standards which led to a jump in defaults. Also, many economists expect weak home prices to drop further."

"'Investors believe the collateral has been impaired since they expect home prices to decline materially over the next year,' the note said."

"The Federal Reserve's attempts to provide liquidity in the past few days are not reaching the players who need it since they cannot borrow directly from the central bank, leaving the $7.2 trillion U.S. mortgage bond market struggling to clear the volumes being offered."

"Losses emanating from the U.S. subprime mortgage market have hit the balance sheets of banks and funds around the world in recent weeks and created the worst credit and liquidity squeeze in world financial markets in a decade."

"'The Fed is spraying the fire but it's hitting the houses around the fire,' said Michael Youngblood, a managing director at FBR Investment Management."

"On Monday, one list of more than $500 million non-agency adjustable-rate mortgages drew offers as low as 93.5 cents on the dollar, Youngblood said."

"The problem for many lenders is that they rely on private funding sources and cannot borrow directly from the Fed, and so are being forced to sell assets to raise cash, analysts said. 'This flood of supply will pressure all sectors of the mortgage market, as investors and dealers are forced to sell other assets to absorb those,' JPMorgan said in a note."

"Two European mortgage-backed securities funds had their ratings slashed to junk from AAA by Standard & Poor's after investors refused to provide short-term financing as the fallout from the U.S. subprime slump spreads."

"Investors including Bill Gross, chief investment officer at Pacific Investment Management Co., have criticized ratings firms for failing to accurately value collateral backing the debt and waiting too long to cut rankings."

"'With the benefit of hindsight, the agencies clearly got it significantly wrong,' said Mark Bowles, who oversees $10 billion of asset-backed securities at UniCredit SpA in London. 'But we are in market conditions that nobody could have foreseen.'"