Some housing bubble news from Wall Street and Washington. "Flippers and other speculators investing in single-family homes helped drive up prices in many hot housing markets during the boom. Now they're contributing heavily to mortgage delinquencies in several of those markets. 'Defaults are on the rise in most parts of the country, but...it is not always the case of a homeowner losing his or her home,' Doug Duncan, the Mortgage Bankers Association's chief economist, said in a statement, 'but [it's] often the case of an investor gambling on a continued increase in home values and losing that gamble.'"

From MarketWatch. "California, Nevada, Arizona and Florida were among the states with the fastest home-price appreciation over the last five years, Duncan noted."

"'This rapid price appreciation attracted both speculators and home builders, a volatile combination that lead to an oversupply of homes that was beyond the capacity of the local populations to support,' he said. 'When this oversupply became apparent and prices began to fall, many of these investors simply walked away from their mortgages.'"

"Freddie Mac's second-quarter net income slipped 45%, primarily due to a higher provision for credit losses and mark-to-market losses on credit-related items, the mortgage giant reported Thursday."

"'On the credit front, we are seeing weakening,' said CEO Richard Syron in the company's press release."

From Dow Jones Newswire. "Freddie Mac shares fell after the home-mortgage financier took a $320 million loss on new mortgages."

"Freddie Mac, which is recovering from a massive accounting scandal, also predicted that third-quarter results would reflect credit-market related stress for its guarantee-related obligations."

"Freddie also said its exposure to subprime mortgages had grown from the end of 2006. The company said its investments of non-agency mortgage-related securities backed by subprime loans rose to $125 billion at the end of June compared with $119 billion at the end of 2006."

The Associated Press. "H&R Block Inc. on Thursday cast new doubt on the pending sale of its troubled mortgage lending arm. 'The mortgage origination market is in the midst of the most severe dislocation it has seen in years, maybe the most severe since the 1930s,' Mark Ernst, CEO, told analysts."

"The company said Option One and two small non-mortgage businesses that are being dismantled lost $192.8 million."

"H&R Block has already slashed its Option One work force by more than half. The company announced Thursday it has stopped approving any new loans that don't comply with Fannie Mae and Freddie Mac requirements, limiting loan originations to $200 million a month, beginning in September. Last year, the company originated $27.1 billion in loans."

From Bloomberg. "Basis Capital Fund Management Ltd., the Australian investment company, sought bankruptcy protection for its second-biggest hedge fund."

"The Sydney-based company's petition to liquidate the Basis Yield Alpha Fund stokes concern that the rout in the U.S. subprime market will lead other hedge funds to report losses when they disclose August valuations to investors next week, said James Chirnside, chief investment officer at Asia Pacific Asset Management in Sydney."

"'We will see some blood,' said Chirnside, who oversees $70 million of funds of hedge funds. 'The contagion spread and was at its worst by the middle of August.'"

"Basis Capital... had more than $1 billion in assets as recently as May. Losses at the Yield Alpha Fund could exceed 80 percent, according to the petition filed yesterday."

"'We are not quite sure what assets are in the fund,' said Sydney- based said Paul Billingham, a liquidator for the Basis fund at accounting firm Grant Thornton. 'There were a number of counterparties that secured the assets and the value of those was changing.'"

From Reuters. "New evidence of damage wrought by the U.S. mortgage sector surfaced in the United States and Europe on Wednesday while banks demanded a record amount of cash at a euro zone money market auction."

"Cheyne Finance, a structured investment vehicle (SIV) managed by hedge fund Cheyne Capital Management, said it was seeking to restructure after being forced to start selling assets to pay down debt."

"Standard & Poor's downgraded Cheyne Finance sharply. Just two weeks ago, the agency said ratings on SIVs, including the Cheyne vehicles, were weathering turmoil caused by defaults on U.S. subprime mortgage lending."

"'The only thing that is certain is that more uncertainties in the direction of asset prices and volatility are on their way,' Bank Julius Baer said in a report."

"U.K. lenders responsible for 12 percent of the nation's mortgages are tightening standards for loans on house purchases, withdrawing offers and raising the cost for borrowers with less than perfect credit."

"'There are some lenders who have pulled their current product range and not announced any new ones,' said Ray Boulger, senior technical manager at Britain's biggest online mortgage broker. 'Others have put up rates until they get little or no business.'"

"In the U.K., so-called subprime lending to homebuyers with a shaky credit history accounts for about 6 percent of the market, half the level of the U.S., according to the London-based Council of Mortgage Lenders."

"'Subprime lending has been of a higher quality in the U.K.,' said Kelvin Davidson, a property economist. 'But the problems don't really emerge until the market starts to turn down.'"

The Birmingham Post. "More than £2,000 was knocked off the price of an average house in the Midlands last month amid growing signs of a property slowdown."

"Charles Smailes, chairman of the board of the National Federation of Property Professionals, thought this was the beginning of a stagnation in prices which would run into 2008."

"He said: 'The slowdown is entirely predictable after the seven interest rates we have had. If the average mortgage is over £100,000, every interest rate increase has added £16 per month. When that happens seven times, it begins to bite.'"

"Mr Smailes thought the slowdown was a good thing and would allow time for incomes to catch up with house prices. 'It's the best thing that could happen to the market; the level of increases we have seen since 2000 have been totally unsustainable.'"

"Only six weeks ago London's financial hub seemed headed for another round of hefty bonus payouts from a bumper first half of transactions. But a global financial downturn has dampened the mood."

"Bankers and traders who splurge on fast cars, vacation homes and luxury yachts with the extra cash each year may be forced to scale back their spending plans as the U.S. subprime turmoil and credit squeeze have brought dealflow to a grinding halt."

"'Banks are having significant increases in their costs. They can't access liquidity as cheaply as before,' said Jonathan Said, a senior economist at the Centre for Economics and Business Research. 'The first costs that you take off are bonuses.'"

"One senior London-based banker said he was not expecting a dramatic fall in bonuses because of the strong first half. 'I am reasonably relaxed about that from a European point of view,' he said. 'We all get paid too much anyway.'"

"The U.S. Federal Reserve is not rushing to cut benchmark interest rates because it wants to break investors of the view that the central bank is there to bail them out, an article in the Wall Street Journal said on Thursday."

"'Officials acknowledge the perception of bailing out investors exists and if allowed to grow, could erode the credibility they need for keeping inflation low and encourage lax attitudes toward risk,' the article said. 'They hope that taking time to weigh the economy's need for rate cuts will help discourage investors from thinking Fed officials are overly concerned with falling asset prices.'"

The Tribune. "Indymac Bank has hired more than 600 former American Home Mortgage Investment Corp. employees who were recently let go by that company. Tuesday's move comes just five weeks after Indymac announced the layoff of 400 workers, roughly 4 percent of its then-total work force of 9,200, in the face of an increasingly tough mortgage market."

"At that time, Indymac CEO Michael W. Perry said industry loan volumes and profit margins were under pressure. Perry said Indymac's challenges have come from a credit cycle with unprecedented liquidity in the capital markets."

"'You had excess lending capacity from the 2003 refi boom and you had a strong economy with pent-up housing demand, which created a housing boom,' he said. 'And that housing boom caused consumers - including a lot of consumers who speculated like they did on stocks - lenders, rating agencies and investors to become too aggressive.'"

The Bradenton Herald. "Since the beginning of 2007, National Association of Home Builders' chief economist David Seiders has lowered his expectations for the housing market four times. 'The reason for the revisions is all because of the new eruptions on the mortgage side,' Seiders said."

"In a teleconference Tuesday, Seiders said a recent Home Builders survey found that 62 percent of the builders who responded are feeling the crunch of tighter lending practices. That number is up from just 33 percent in March. He predicts it could take until 2011 to see a full recovery."

"After the unsustainable boom of 2003, 2004 and 2005, prices started to return to normal. Seiders and many other economists found hope in the market's stabilization. Then the mortgage meltdowns began."

"'It looked like things were stabilizing the middle of this year, but I'm sure we'll see another decline,' Seiders said. 'It's an overreaction to the subprime market that triggered other issues. Consumers feel tremendous uncertainty.'"

"He also said that while prices have tumbled in many markets, they still have a way to go until they get to a mark where individuals with good credit can get a more traditional mortgage without a skewed income-to-debt ratio. He predicts price appreciation across the nation may not start until sometime in 2009."

"'The reality is we did have a lot of overaggressive lending during the boom,' Seiders said."