Some housing bubble news from Wall Street and Washington. Bloomberg, "Subprime mortgage bonds created in the first half of 2007 contain loans that are going delinquent at the fastest rate ever, according to Moody's Investors Service. The average rate of 'serious loan delinquencies' in the securities has been higher than 2006 bonds, Moody's analysts Ariel Weil and Amita Shrivastava wrote. Serious loan delinquencies are those 60 days or more past due, including properties in foreclosure or already foreclosed upon."

"'It is shocking what you see,' said Kyle Bass a hedge fund that reported a 400 percent return on its bet the U.S. housing market would fall. 'Anything securitized in 2007 has got to have the worst collateral performance of any trust I've seen in my life.'"

"Data in the Moody's report suggests that accelerating delinquencies from 2007 bonds are likely to eclipse 2006."

"Many of the loans that investors shunned in 2006 were able to be successfully securitized in 2007 because of the limited availability of new loans to purchase, according to Andrew Chow, who manages about $7 billion in asset-backed bonds and mortgage securities."

"'It's not surprising that the performance of that type of loan is in fact even worse than the average of 2006 because these are the loans that were rejected from those deals,' Chow said."

The Financial Times. "A high proportion of the worst-performing loans from 2006 originated in California, Moody's said. It identified falling house prices as a contributor to the overall poor performance of the 2006 vintage, and California has been particularly hard hit by house price depreciation."

The Associated Press. "Investment bank Merrill Lynch & Co. said Friday credit and mortgage woes will lead to it post a third-quarter loss...after taking roughly $5 billion in writedowns. The bulk of the losses will come from marking down the value of collateralized debt obligations and subprime mortgages."

"Rising delinquencies and defaults among mortgages, especially subprime loans, has led to the near disappearance of investors willing to buy the loans. Without an investor market, the value of the loans decreases."

The Dow Jones Newswires. "Merrill noted it 'significantly reduced' its exposure to those products during the quarter."

"Citigroup Inc. and UBS AG said on Monday they would record multi- billion dollar write-downs for the quarter."

"Earlier Friday, Washington Mutual Inc. said it expects to set aside $975 million on a pretax basis in the third quarter to cover potential future loan losses and record a $150 million write-down on mortgage loans it planned to sell because of the summer's credit crunch."

"Washington Mutual said the additional reserves 'reflects ongoing weakness in the housing market, primarily as it affects subprime and home equity loans, as well as growth in the company's loan portfolio."

"The mortgage write-down is due to loans Washington Mutual planned to sell that instead were moved to the company's investment portfolio due to the credit- market seizure that essentially dried up demand for mortgage-related securities."

"The third quarter's results also will include nearly $150 million in pretax trading losses and pretax impairment losses of about $110 million on investment- grade mortgage-backed securities that are available for sale."

"Washington Mutual has cut its lending staff 28 percent since the end of 2005, the company said in a presentation Sept. 10 in New York. The lender fired about 1,000 people last month as it closed two divisions."

"'You're going to find a lot of companies having to come clean with these assets on their balance sheets,' said Terry Wakefield, a mortgage-industry consultant. 'There's still somewhere between $75 billion and $150 billion of write-offs that have not yet occurred, and they're going to surface as the quarterly earnings process unfolds.'"

The Independent. "Irish banks face taking a €1bn bad loans hit between this year and 2009 as a slowing domestic property market leads to rising defaults among mortgage holders and commercial property and development borrowers, according to Swiss investment banking giant UBS."

"'In our (stress) test, we assume that Irish house prices fall 5pc a year for the next three years and grow 2pc in 2010, and the number of home movers falls by 32pc over the next three years,' UBS said. 'If we assume that 20pc of the Irish mortgage market has an LTV of greater than 85pc, it implies €25bn of at-risk loans on the banks' balance sheets.'"

"Barratt Developments Plc and Taylor Wimpey Plc fell in London trading after ABN Amro cut its recommendation on U.K. homebuilders, citing a deteriorating outlook for the market."

"The tighter credit market, which forced mortgage lender Northern Rock Plc to seek emergency funding, has further sapped the confidence of home seekers, the London-based analyst said. House prices are likely to be flat during 2008 and 2009, and they may even fall, said ABN's William Jones."

The Evening Times. "Banks are raising their rates in response to the interbank lending rate, or Libor rate, hitting a six-year high after the crisis in the US sub-prime market."

"'In the past month we have seen a move away from what the Bank of England does with its interest rates being the be-all and end-all of what happens on the mortgage market,' said Louise Cuming, head of mortgages at moneysuper market.com. 'It now has a mind of its own. All lenders are looking at their bottom line and its costing them more to borrow money and that is going to be passed on to the consumer.'"

The Sydney Morning Herald. "Calls for greater regulation of non-bank lending have increased after 50,000 RAMS home-loan customers were hit with a second interest rate rise in six weeks."

"The struggling RAMS was thrown a lifeline when Australia's fourth-largest bank, Westpac, agreed to buy the troubled non-bank lender's branches. Despite the rescue package, the non-bank lender this week raised rates on its full-documentation and low-documentation variable loans."

From MarketWatch. "The U.S. attorney in Brooklyn has started a criminal investigation into a pair of hedge funds run by Bear Stearns Cos. that had positions in mortgage-backed securities and subsequently collapsed last summer, The Wall Street Journal reported."

The Wall Street Journal. "A court victory by a shareholder of Countrywide Financial Corp. promises to fuel further public debate over the mortgage lender's executive compensation just as it is struggling to regain investor confidence."

"Angelo Mozilo, the lender's chairman and CEO, has opposed a push by some shareholders for an advisory vote on compensation, also has argued that companies need to pay whatever it takes to attract the best talent. 'If anybody makes a billion dollars, that's America,' he said in an interview earlier this year. 'That's terrific.'"

From Reuters. "Brookfield Homes Corp on Friday said net new orders for the third quarter fell more than 50 percent to 130 units, on continued weakness in home buyers' confidence and high inventories levels."

From CNN Money. "Brookfield had lower than anticipated net new orders in the third quarter, and now anticipates approximately 1,000 home closings for 2007. The decline in third quarter net new orders arose primarily in the Southland and San Diego/Riverside markets where...the demand was impacted by job losses and tighter lending standards."

"In accordance with SFAS 144 'Accounting for the Impairment or Disposal of Long-Lived Assets,' the company regularly reviews its housing and land assets for recoverability. With market conditions having deteriorated further in recent months, in particular, in the Central Valley and Inland Empire of California, the company has continued to lower its expectation of future revenues on its projects."

"As a result, the company anticipates impairment charges and write-downs on its housing and land inventory for the three months ended September 30, 2007 in the range of $40 million to $50 million."

The Palm Beach Post. "Troubled homebuilder Standard Pacific made headlines last month with its push to sell 200 homes in 10 days in Southern California. To lure buyers, it dangled free plasma TVs and cut-rate mortgages."

"While Standard Pacific didn’t advertise its 'Mission: Possible' promotion in Palm Beach County, it did unload a chunk of vacant land here last week for 20 percent less than it paid at the height of the housing boom. Standard Pacific didn’t include a TV, but it did give the buyer a mortgage."

"When D.R. Horton Inc., the second- biggest U.S. homebuilder, couldn't sell the one-bedroom condominium in San Diego it listed for $349,800, the property was auctioned as a last resort for 37 percent less."

"D.R. Horton, with annual revenue of about $11 billion, and Hovnanian Enterprises Inc. now face the worst choice in the worst residential real estate slump since the 1930s. They're selling homes at any price they can get."

"'It's desperation time and some companies may not make it,' said Alex Barron, an industry analyst. 'At this point in the housing cycle, if you have too much debt, it's hard to get out from under it.'"

"Homebuilder profits depend on the cost of land, said John Burns, president of John Burns Real Estate Consulting in Irvine, California. Companies can still make money building on land purchased before the 2005 peak of the five-year U.S. housing boom, though price declines of as little as 10 percent might wipe out those profits, he said."

"'They are all losing money,' Burns said. 'They'll talk in terms of gross margin and it sounds like they made money, but they actually lost money because they didn't make their costs.'"

"During Hovnanian's 'Deal of the Century' promotion last month, the company sold a 2,900-square foot five-bedroom, three- bathroom house in Royal Palm Beach, Florida, for $525,000, said Kathy Bell, who bought a house with the same floor plan down the street for $575,000 in March 2006."

"'It really stinks,' said Bell, who lives in Hovnanian's development in Royal Palm Beach, Florida. 'We were here in the beginning and we didn't get any deals. It's very upsetting.'"

"'We might discount a home 20 percent if the profit margin was 30 percent, but we haven't discounted any properties 40 percent, which some homebuilders are doing to raise cash,' said WCI Communities Inc. Chief Financial Officer Jim Dietz."

"D.R. Horton overcame qualms about its image with the Sept. 29 auction of 56 unsold San Diego condominiums. 'I ran the numbers and the condos sold for between 68 cents and 74 cents on the dollar based on the original asking prices,' said said Steven Moran, an agent with Century 21 Award in San Diego, who attended with 11 clients."

"A condo with an enclosed balcony and an indoor parking spot was originally listed at $349,800 and sold for $220,000, Moran said. D.R. Horton also threw in a washer-dryer and $2,500 toward closing costs, Moran said."