Some housing bubble news from Wall Street and beyond. Forbes, "The moment that the British banking sector has been dreading came on Friday. Northern Rock, the country's fifth-largest mortgage lender, confirmed late on Thursday that it had requested and received a line of emergency funding from the Bank of England."

"'It has now become clear that the global credit and liquidity markets have not recovered in the early part of September, and that there continues to be a severe liquidity squeeze,' said the bank on Friday."

The Financial Times. "Early on Friday, anxious Northern Rock customers reported they were unable to access their online accounts following news reports of the Bank of England rescue. It appeared the volume of traffic from depositors and mortgage holders had caused the website to freeze."

"Northern Rock had concentrated almost exclusively on mortgages. To finance this growth it imported innovative financing techniques from the United States, such as issuing securities backed by mortgages, which were eventually copied by other large banks. Northern Rock was showered with praise by the investment banks that helped arrange this financing, and its executives could often be seen picking up awards at industry events."

"But just as Northern Rock benefited from the markets, so it has fallen victim to their fragile confidence."

From Thompson Financial News. "Customers of Northern Rock were rushing to withdraw their savings today despite reassurances from the group that their cash is safe."

"At Moorgate, the line of worried customers included retiree Arthur Smith of Islington, north London. 'I'm closing my accounts and my ISAs. It's my life savings, about 60,000 pounds. I hope the Bank of England will help them out,' he told Thomson Financial News."

"Another retired man, who declined to be named, said: 'The Bank of England won't back them indefinitely. This brings back memories of Equitable Life. It's quite likely the Bank of England will say it's the end of the road at some stage.'"

The Guardian. "The Bank of England has talked a lot about the 'moral hazard' of bailing out institutions that have made poor business decisions as they chase after profits."

"But now the crisis has moved away from the City and on to the high street it is likely to take a very different line. It has opened a line of credit to Northern Rock, which means the bank will be able to meet any and all of its liabilities. That said, it was also unthinkable that Equitable Life would go under."

"Northern Rock will no longer be in the business of offering cheap remortgages and may be forced to raise its standard variable rate."

"Of course, borrowers can always remortgage to an alternative lender, but expect to see lending criteria tighten sharply across the board. If you were a borrower who took a 125% Together loan at Northern Rock, there won't be many other lenders willing to take you on."

"The only silver lining is for savers. Mortgage rates may be on the way up, but so are savings rates."

From MarketWatch. "'Northern Rock is a definite takeover target,' said David Buik, a strategist at Cantor Index in London. Although the bank has far too much exposure to the U.S. mortgage market because of its twin role as a lender and as a trader of collateralized-debt obligations, it still has a 'decent mortgage book' and some nice assets, Buik said."

"Christopher Kummer, president of the Zurich-based Institute of Mergers, Acquisitions and Alliances, stressed a possible scarcity of bidders. 'In such a situation, the list of possible acquirers will be quite short unless the risks are transparent and limited and the price would be extremely low,' he said."

"'I doubt that given the current market situation any responsibly behaving company board would approve the possible acquisition of Northern Rock,' he added."

The BBC. "Shares in UK buy-to-let mortgage lender Paragon Group slumped, as fears deepened over the ability of banks to finance their loans."

"Paragon Group is solely a mortgage lender with no deposit facilities, which means it is reliant on issuing debt supported by the interest income from its mortgages and credit deals with major investment banks for cash flow."

"'It is able to pass higher funding costs onto borrowers, but there will be a timing lag,' said Joanna Parsons, an analyst at ABN Amro, of Paragon's position. 'Plus, higher mortgages will reduce the attraction for landlords to buy, unless higher mortgage charges can be passed onto tenants.'"

From Bloomberg. "London house prices fell the most since 2004 this month after five interest rate increases in a year and turmoil in financial markets sapped buyers' confidence, according to a Rightmove Plc report."

"Growth in London property values is faltering after the collapse of the U.S. subprime mortgage market triggered losses in securities linked to the loans and spurred banks to raise lending rates."

"'We've reached the peak of the current boom,' Miles Shipside, commercial director of Rightmove, said in an interview. 'Affordability is stretched, and people are concerned about global financial markets and their ability to take on greater commitments.'"

From CNN World Weekly. "In the last 15 years countries such as the U.S., UK, Australia and Canada have enjoyed an economic golden age. But a flip side is emerging from this era of excess, with potent signs in the last week that the party is coming to a close."

"Rising U.S. home foreclosures and a persistent housing slump have triggered a U.S. credit crunch which has unsettled global markets and raised concerns about a possible economic slowdown."

"Economist Andrew Charlton from the London School of Economics believes the U.S. housing slump and high levels of personal debt are part of the same problem: People on low incomes getting in over their heads with either housing stock or personal debt they cannot afford."

"Philip Hodson sees a few factors responsible for our credit binge: 'We've developed retail therapy -- it's a drug -- but it's a very fragile plant and to build an economy based on it is ridiculous.'"

"He also says the government has encouraged a people to be reckless with money through their own bad example: 'The government must take much of the blame for encouraging a debt culture.'"

"Economist Charlton believes our reliance on credit is symptomatic of prosperity: 'It's the by-product of the boom. In for example, Australia almost 30 percent of the population have never lived through a recession -- young people believe you can always take on debt because it's always easy to pay off.'"

"Merrill Lynch & Co., the biggest underwriter of collateralized debt obligations, signaled that third-quarter profit may be hurt by the subprime-mortgage crisis and said making money in credit markets remains tough."

"The New York-based firm said in a regulatory filing today that it made 'requisite fair value adjustments' for potential losses to date on holdings and financing commitments. Merrill is at risk because it participates as an investor, lender, counterparty and guarantor in markets tied to subprime mortgages."

The Orange County Register. "Long Beach Mortgage Co., one of Orange County's first big subprime lenders, is facing its final days amid ongoing downturns in the mortgage and housing markets."

"Parent company Washington Mutual, the largest U.S. savings and loan, said it's shuttering Long Beach's Anaheim headquarters and letting all 155 workers go in about 60 days."

"Wall Street investors are shunning all but the safest home loans amid higher loan delinquencies and foreclosures. In Orange County, for example, banks foreclosed on 469 homes in August, the highest since October 1997, reports DataQuick."

"Hovnanian Enterprises Inc. CEO Ara Hovnanian said the U.S. housing market is near the bottom and won't recover until 2009. 'The bottom is very near but I think its going to stay along the bottom for a while before a recovery,' Hovnanian said today."

"Hovnanian, whose family has been building homes since 1959, said a three-day sale starting today may help boost revenue in the company's slowest markets, including California and Florida."

"The company's sale will be held in 18 states including California, New Jersey, New York, Arizona, Ohio and Illinois. Hovnanian is offering discounts of up to almost $150,000 on homes."

"Buyers will 'realize unprecedented savings' with incentives of up to $100,000 in some California developments and more elsewhere, the company said in statements issued this week."

"Asked whether the sales event was an act of desperation, Ara Hovnanian said it was a 'logical thing to do' in the current market."

The Associated Press. "A Friedman Billings Ramsey analyst said Friday any benefit stocks of mortgage lenders will enjoy if the Federal Reserve cuts its interests rates this month will be temporary. Analyst Paul J. Miller Jr. said cutting rates will strengthen lenders' profit margins, but will not fix the fundamental problem that led to the drainage of cash in the first place: sinking home values."

"No matter what it does with interest rates, Miller said the Fed cannot rescue slipping home prices. As long as investors have no faith in housing, they will not finance mortgages, he said."

"Former Federal Reserve Chairman Alan Greenspan acknowledges he failed to see early on that an explosion of mortgages to people with questionable credit histories could pose a danger to the economy."

"In an upcoming interview, Greenspan said he was aware of 'subprime' lending practices where homebuyers got very low initial rates only to see them later jacked up, causing severe payment shock. But he said he didn't initially realize the harm they could do."

"'While I was aware a lot of these practices were going on, I had no notion of how significant they had become until very late,' he said in a CBS '60 Minutes' interview to be broadcast Sunday. 'I really didn't get it until very late in 2005 and 2006,' Greenspan said."

"Critics say the Fed kept rates too low for too long, encouraging a Wild West mentality in housing."

"After the 2001 recession, the Fed cut its benchmark rate to a four-decade low of 1 percent. That move, along with Greenspan's hands-off approach to regulation, have brought him under fire as this year's bursting of the housing bubble and the subprime mortgage crisis again threaten to sink the broader economy."