Some housing bubble news from Wall Street and Washington. Bloomberg, "Countrywide Financial Corp., the largest U.S. mortgage company, said late payments at its servicing unit rose, foreclosures doubled and new loans fell 44 percent as housing sales slowed. Overdue loans as a percentage of unpaid principal increased to 5.85 percent in September from 4.04 percent a year earlier, the company said. Foreclosures climbed to 1.27 percent from 0.51 percent."

"Total employment fell by more than 4,900, with most of the reduction among staff that handles new loans, said a report by Credit Suisse Group."

Dow Jones Newswire. "Countrywide President David Sambol said the drop in lending volumes 'is reflective of current market conditions and more restrictive underwriting.'"

"Countrywide also continued to cut its loan pipeline, which should lessen the stress on its near-term funding needs. It had $42 billion of in-process loans as of the end of last month, a drop of 35% from a year earlier and of 19% from the previous month."

The Associated Press. "With rising delinquencies among subprime mortgages, Countrywide has nearly abandoned that type of loan completely. Subprime originations fell to $255 million in September, from $3.1 billion during September 2006."

"Funding of adjustable-rate mortgages was drastically reduced as well. Countrywide originated $3.8 billion in adjustable-rate mortgages in September, down from $15.8 billion last year."

"U.S. home foreclosures doubled in September from a year earlier as subprime borrowers struggled to make payments on adjustable-rate mortgages, RealtyTrac Inc. said."

"There were 223,538 foreclosure filings last month, including default and auction notices and bank repossessions. California had the most with 51,259 and Florida was second with 33,354. The national foreclosure rate was one for every 557 households, RealtyTrac said."

"As many as half of the 450,000 subprime borrowers whose mortgages will re-set through November may lose their homes because they can't afford the higher payments, according to a report by Credit Suisse Group."

"'The truth of the matter is that borrowers are going into default as soon as they hit their adjustments,' said RealtyTrac VP Rick Sharga."

"Foreclosures on loans made in 2005 may 'start to wind down' at the end of the year, while loans made in the first half of 2006 will probably lead to additional foreclosures in the middle of 2008, Sharga said. 'This wave ends in December, and another wave starts in May,' he said."

"Prices in 20 U.S. metropolitan areas fell 3.9 percent in the 12 months through July, the most on record, according to the S&P/Case-Shiller home-price index."

From Reuters. "Downey Financial Corp said it expects a third-quarter operating loss of about $23 million, or 84 cents a share, as it increased allowances for loan losses due to loan delinquencies and losses from foreclosures in a continued weak housing market."

"The savings and loan holding company said in the quarter it posted an about $82 million pretax provision for credit losses, which boosted the allowance for loan losses to about $144 million."

"Downey said the housing market issues, disruption in the secondary mortgage markets, hurt its borrowers and the value of their loan collateral in the quarter. The single family loan delinquencies and losses from foreclosures rose significantly during the third quarter, CEO Daniel Rosenthal said."

"Goldman Sachs Group Inc., the world's biggest securities firm, said its holdings backed by pools of bonds and loans dropped 53 percent in the third quarter, the second consecutive decline amid a global credit contraction."

"The 'fair value' of retained interests in collateralized debt obligations and loan obligations was $1.77 billion at the end of August, down from $3.79 billion three months earlier, the firm said in a regulatory filing."

"'There was nothing in the mortgage space that didn't decline in value,' David Viniar, Goldman's chief financial officer, said in an interview after the Sept. 20 earnings report. 'Anything we had was down.'"

"Beazer Homes USA Inc., the homebuilder under investigation by the Securities and Exchange Commission, will restate earnings going back to 1999 after an internal probe found its mortgage unit violated federal regulations."

"Employees violated U.S. Department of Housing and Urban Development rules related to the agency's down payment assistance program, Beazer said. Beazer shares fell to a seven- year low this year as the SEC and the FBI started investigations of its accounting and lending practices."

"'They're not going to fight. They can't win,' said Peter Henning, a law professor at Wayne State University Law School in Detroit. 'You admit your accounting is wrong and there were problems in your loan documentation, there's nothing to fight about.'"

"The FBI opened a potential fraud probe of Beazer after the Charlotte Observer reported in March it sold homes to low-income buyers who couldn't afford them. The loans were based on the assumption the buyer's income would rise, a practice restricted by the Federal Housing Administration."

"The company's FHA-insured mortgage origination business may have violated 'standard representations made to mortgage purchasers,' according to the statement today."

"HUD ended the down payment program this month after saying it led to higher prices and more foreclosures for home buyers."

"The program let nonprofit organizations including AmeriDream Inc. fund down payments for low- and middle-income home buyers and be reimbursed by the sellers of the homes. It was used by more than 100,000 consumers last year and accounted for a third of all Federal Housing Administration loans."

"Sellers sometimes try to recover the cost of the fee they pay nonprofits by raising the price of the house an average of 3 percent, a 2005 study by Congress's nonpartisan Government Accountability Office found. The higher prices helped to double the rate of foreclosures on homes paid for with FHA-backed assistance, agency audits found."

"Beazer issued preliminary financial results for the fourth quarter and said home closings fell 39 percent to 3,940. New orders plunged 52 percent to 990 homes as the cancellation rate surged to 68 percent due 'in large part to the pronounced tightening in the mortgage markets in August and September.'"

"In August, the company's credit rating was cut by Moody's Investors Service on concern the housing recovery won't occur before 2009."

From Forbes. "Moody's Investors Service lowered its corporate family ratings on homebuilders Centex Corp, Lennar Corp, and Pulte Homes Inc to 'Ba1' with a negative outlook."

"Moody's said it sees no sector recovery beginning before 2009 at the earliest, due to elevated new and existing housing inventory levels, disruptions in the mortgage market, thus prolonging the companies' underperformance on key financial metrics against prior expectations."

"Existing home sales this year probably will fall to a five-year low, worse than forecast, signaling the U.S. housing market is far from hitting bottom. New-home sales may decline 24 percent to a 10-year low of 804,000 and existing home sales will fall 11 percent, the National Association of Realtors said in a news release."

"It was the 10th time this year the Chicago-based group lowered some part of its monthly housing and economic forecast."

"The decline in new home sales forecast for 2007 by the Realtors is 37 percent down from the record of 1.28 million sales in 2005. That would exceed the 25 percent three-year drop that ended in 1991, the last housing recession."

"Housing starts in 2007 probably will tumble 24 percent, on the heels of a 13 percent drop last year, the real estate trade group said. 'A cutback in housing construction is a positive sign for the market because it will help lower inventory and firm up home prices,' Lawrence Yun, an NAR economist, said in the report."

"The eighth straight downwardly revised forecast from the National Association of Realtors calls for U.S. existing home sales to be 10.8 percent below last year as housing market woes persist."

"Despite the bleaker outlook, the group maintains an optimistic message. Its senior economist, Lawrence Yun, noted in a statement that...2007's home sales will be the fifth-highest on record."

"'The speculative excesses have been removed from the market and home sales are returning to fundamentally healthy levels, while prices remain near record highs, reflecting favorable mortgage rates and positive job gains,' Yun said."

The Wall Street Journal. "An analysis of more than 130 million home loans made over the past decade reveals that risky mortgages were made in nearly every corner of the nation, from small towns in the middle of nowhere to inner cities to affluent suburbs."

"The analysis of loan data by The Wall Street Journal indicates that from 2004 to 2006, when home prices peaked in many parts of the country, more than 2,500 banks, thrifts, credit unions and mortgage companies made a combined $1.5 trillion in high-interest-rate loans."

"Most subprime loans, which are extended to borrowers with sketchy credit or stretched finances, fall into this basket."

"The Journal's findings reveal that the subprime aftermath is hurting a far broader array of Americans than many realize, cutting across differences in income, race and geography."

"The data also show that some of the worst excesses of the subprime binge continued well into 2006, suggesting that the pain could last through next year and beyond, especially if housing prices remain sluggish."

"'We had an aggressive home-mortgage industry trying to get people into homes they couldn't afford at a time when home prices were very high. It turned out to be a house of cards,' says Karl Case, an economics professor at Wellesley College. 'We're in the early stages of the cleanup.'"

"Kristine McMahon has a six-figure income as a mortgage broker and lives in a four-bedroom home in East Hampton, N.Y., valued at more than $2.7 million. Yet Ms. McMahon, who works for Manhattan Mortgage, chose a subprime loan for herself when she refinanced last year to turn some of her home equity into cash."

"Ms. McMahon says that at the time of the refinancing, a conventional lender would not allow her to take out as much cash during the refinancing as her subprime lender, New Century Financial Corp., which is now operating under bankruptcy-court protection."

"Ms. McMahon chose a subprime loan that carried a fixed-rate of 6.45% for the first two years before turning into an adjustable rate. She plans to sell the house before the higher adjustable rates kick in."

"Last September, Darla Ball purchased a $460,000 home in Las Vegas using an adjustable-rate subprime loan with an initial rate of 8.2%. At the time, she says, she expected to refinance before her interest rate resets to 14% next year, which will raise her monthly payments to $8,000 from $3,700."

"But in the past year, she says, prices of comparable homes in her subdivision have fallen to $310,000, which means she would not qualify for a new $460,000 mortgage, unless home values go back up to that level, an unlikely scenario."

"She says she has stopped paying her mortgage and is trying to negotiate with her lender. 'I'm going to lose my home anyway,' she says, 'so why pay?'"