Some housing bubble news from Wall Street and Washington. Prime Newswire, "TOUSA, Inc. announced today that it has withdrawn all guidance related to 2007 and 2008 due to worsening market conditions impacting the new home industry."

"'Conditions in all of our markets weakened more than we anticipated due to a number of factors including: recent severe liquidity challenges in the credit and mortgage markets, diminished consumer confidence, increased home inventories and foreclosures, and downward pressure on home prices. All of these factors have contributed to lower gross sales and higher cancellation rates,' said CEO Antonio B. Mon."

From Reuters. "'Here's a company that's already considered one of the weaker credits. It's being battered already, and this is some additional bad news and not surprising,' said Bob Curran, managing director of Fitch Ratings. 'Now they're on the same plane with the other companies from that guidance prospective, which is there is none,' he added."

"The cost of insuring Beazer Homes USA's debt with default swaps is trading at distressed levels, costing 18 percent of the amount insured paid upfront, or $1.8 million to insure $10 million in debt for five years, in addition to payments of $500,000 per year."

"'After a horrendous July and August, and a tepid September at best, (Beazer) is on track to announce a truly dismal quarter,' said analyst Vicki Bryan."

"Meanwhile Beazer's debt investors say a delay in filing its earnings for the June 30 quarter, prompted by an internal probe, puts it in technical default on $1.5 billion in debt."

"H&R Block Inc said on Wednesday bank lines at its Option One Mortgage Corp lending unit were terminated or reduced, as the subprime mortgage company reduces it lending volume. Banks reduced and closed out warehouse lines of credit, which H&R Block's Option One Mortgage Corp used to temporarily finance home loans made to consumers."

"H&R Block has struggled to sell the Option One unit as rising defaults force mortgage lenders to scale back their lending to people with weak credit."

PR Newswire. "A class action lawsuit was filed in the United States District Court for the Central District of California on behalf of all purchasers of securities of Impac Mortgage Holdings, Inc. from May 10, 2006 through August 15, 2007, inclusive."

"The Complaint alleges that the Company failed to disclose and misrepresented the following material adverse facts which were known to defendants or recklessly disregarded by them...that the Company was under-reserving for loan losses as conditions in the mortgage industry deteriorated...that the Company was experiencing an increasing level of loan delinquencies and defaults, which would require the Company to repurchase an increased number of loans going forward."

"That the Company had failed to write-down the value of certain loans in its portfolio as they declined in value...that the Company was experiencing increasing difficulties in selling its loans, and would be forced to discount prices...that the Company's underwriting guidelines were not adequately restrictive for borrowers in its loan markets."

The Scotsman. "Embattled bank Northern Rock is to axe the bulk of its mortgage range in the first product shake-up since the lender was thrown an emergency funding lifeline by the Bank of England last month."

"Northern said today it was axing two-thirds of its mortgage range, although the Newcastle-based bank is still willing to lend up to 125 per cent of a property's value through a combination of secured and unsecured loans."

The Telegraph. "The Valencia property developer Llanera has become the first high-profile victim of the credit crunch in Spain, declaring insolvency yesterday after failing to meet payments on €748m of debt."

"The fashionable builder was unable to reach agreement with Lehman Brothers and other banks on a refinancing deal, a sign that foreign creditors are no longer willing to underwrite Spain's property market."

"Almost 800,000 homes were built in Spain last year, leaving a glut of 300,000 properties in the market."

The Wall Street Journal. "Earlier this year, the Manly Council, which governs a beachfront Sydney suburb, handed 5.5 million Australian dollars (US$4.9 million) to Grange Securities, a small Australian investment bank. Council staffers were taken with the idea of slightly higher returns that Grange representatives proffered."

"Now, Manly is ruing its investment decision, as are many councils across Australia. Manly officials say A$3 million of the money the council gave Grange was invested in collateralized debt obligations, bonds underpinned by large pools of debt, including, in one case, U.S. subprime mortgages. As of Aug. 31, Manly was facing a paper loss of A$588,767 on the money it gave to Grange."

"(A) gripe was that some of its CDOs, which contained U.S. and European assets, had Australian names, such as Kalgoorlie."

"These labels disguised the true nature of the investments, some say. 'I will make the conclusion that they were trying to mislead us, by giving Australian names to U.S. assets; you can draw your own conclusion,' said Councillor Andrew Petrie in Woollahra, which owned Kalgoorlie. 'If they'd been called 'Detroit,' you'd have said, 'What's this?'"

The Associated Press. "The Center for Audit Quality weighed in Wednesday on credit-market jitters spawned by troubled subprime-mortgage loans, warning the problem may keep investors sidelined and pose challenges for auditors."

"'It is not possible at this time to predict how long investors will stay on the sidelines or which markets will be most affected, but it is not unreasonable to expect _ especially for subprime mortgage-related assets _ that current conditions could persist for an extended period of time until the uncertainty is reduced,' the Washington nonprofit said."

The New York Times. "Merrill Lynch, facing the prospect of a major write-down from its exposure to the sinking mortgage market, dismissed two senior executives in its fixed-income division yesterday."

"The firings also signaled that the aggressive push by Merrill’s CEO, E. Stanley O’Neal, into riskier markets like leveraged loans, subprime mortgages and complex structured investments, all of which lie beyond the firm’s traditional area of expertise, may be coming back to haunt him."

From MSNBC. "Nationally, the number of homes in foreclosure soared by 36 percent between July and August, and foreclosures have more than doubled in the past 12 months, according to RealtyTrac."

"Between July and August, foreclosure filings jumped by 48 percent in California and 77 percent in Florida. Nevada has the highest foreclosure rate in the country — one of every 165 households."

"Why are we in this mess? It’s the hangover from the housing bubble."

"Countrywide Financial Corp, scorched by the U.S. subprime meltdown and smarting from negative publicity about its lending practices, is fighting to salvage its battered reputation."

"The largest U.S. mortgage lender is 'playing offense,' according to a senior executive, and has hired a public relations firm with a reputation for firefighting, to design an 'attack' strategy."

"Countrywide has been struggling as rising defaults, falling home prices and tighter credit markets make it harder to operate. The lender is also fighting criticism that it lowered lending standards by making home loans to people who could not afford them, and thus contributed to the rise in foreclosures."

"'If you just have a bunch of sizzle and it's not backed up by what the company is doing correctly, it will backfire and end up undercutting your credibility more,' said Kent Jarrell, a senior VP at APCO Worldwide who has managed crises for Worldcom and Merck. 'They've got to make sure they're not in denial about the criticism,' he said."

The Buffalo News. "In 1624, frenzied speculators in Holland ran up the cost of a tulip bulb to 3,000 guilders (about $100,000). When fears arose that this 'bubble' might burst, lenders reduced the interest rates on loans in order to allow speculators to continue buying the bulbs and thus keep the bubble going as long as possible."

"Although it was a recipe for economic disaster, this short-sighted policy only ensured that when the bubble burst the consequences would be far more severe than if the excesses had been wrenched from the system earlier."

"When American wage earners making $40,000 a year are being tricked by lenders’ teaser terms and the Federal Reserve’s low short-term rates into buying half-million dollar, two-bedroom shacks in the overheated California housing market, it is clear that housing has become today’s tulip bulbs."

"The Fed policy of feeding the housing bubble with low rates has been rationalized by claims that low rates are necessary to 'stabilize the markets' and to save the small homeowner from the economic impact of foreclosure."

"Nothing could be further from the truth. Homeowners who have put nothing down on their homes have little to lose when foreclosure lets them off the hook."

"Fed policy can continue to bow to the political pressure for low rates exerted by leaders of big banks and the hedge funds or it can restore the full faith and credit of the U.S. dollar, make housing affordable and dampen the speculative frenzy that brought about the crisis in the first place."