Some housing bubble news from Wall Street and Washington. Reuters, "Beazer Homes USA Inc said it cut 25 percent of its staff, would suspend its dividend and sees at least $230 million in noncash impairment charges in its fiscal fourth quarter. 'The housing industry continues to face the most difficult business conditions in over a decade,' CEO Ian McCarthy said in a statement."

"Last month, Beazer said sales for the quarter fell 39 percent to 3,940 homes. Net new home orders fell 53 percent to 973, and the cancellation rate soared to 68 percent."

The Charlotte Observer. "Beazer in October admitted some of its employees violated federal housing regulations. It will have to restate earnings for the past three years. It also is late in filing financial documents with the Securities and Exchange Commission. Beazer said preliminary financial data released Monday for the fourth quarter is unaudited and 'subject to change.'"

"Upscale home builder Hovnanian Enterprises Inc said the sales pace in October in most of its markets 'significantly deteriorated' when compared with recent months."

"Preliminary fourth-quarter results showed net contracts fell 10 percent to 2,781 homes, while deliveries slid 19 percent. The company said cancellations for the quarter that ended October 31, were 40 percent of gross contracts, up from 35 percent in the previous quarter as well as the year-ago quarter."

"The company said its contract backlog at the end of October, excluding unconsolidated joint ventures, was 5,938 homes, down 30 percent from last year."

The Street.com. "Some analysts now expect the homebuilder to implement another round of steep price cuts to clear its large inventory of houses. More than half of Hovnanian's orders in the recent quarter came during the company's heavily hyped 'Deal of the Century' weekend sale."

"More pain could lie ahead, according to analyst Daniel Oppenheim. He expected a 25% year-over-year decline in orders. 'Sales likely fizzled after Hovnanian attempted to pull away incentives from its 'Deal of the Century' promotions the weekend of Sept. 14-16,' Oppenheim said. 'We expect that Hovnanian will reintroduce discounts similar or greater than before in order to maintain sales and generate positive cash, since competitors who matched its temporary promotions actually set new market prices.'"

The Times Online. "Bovis, the (UK) housebuilder, has given warning that faltering consumer confidence has hit sales and house prices during the key autumn sales period.In one of the firmest indications yet that the housing market is slowing, Bovis said that it expected the average sales price for one of its own homes to fall by 3 per cent this year, compared with 2006."

"The price fall would mark a dramatic reversal for Bovis and the market."

The Irish Examiner. "The predicted downturn in the Irish housing market has become a reality with latest figures showing that registrations fell by two-thirds in October."

"IndyMac Bancorp Inc, one of the largest independent U.S. mortgage lenders, on Tuesday posted a quarterly loss more than five times larger than it had projected, hurt by mounting delinquencies and a collapse in investor demand to buy its home loans."

"Credit losses at IndyMac quadrupled from the second quarter to $407.7 million, while losses related to the sale of mortgages totaled $167.2 million. Results also reflected costs to eliminate 1,547 jobs."

The Associated Press. "IndyMac increased its credit reserves by $441 million, or 47 percent, in the third quarter, to $1.39 billion. IndyMac's charge-offs rose to $146 million in the third quarter."

"'We are clearly disappointed with this quarter's results, which were driven by deteriorating mortgage delinquencies and a declining housing market combined with an unprecedented collapse in the secondary market,' CEO Michael Perry said in a statement."

"IndyMac primarily originated alt-A loans for customers who cannot provide documentation like traditional, prime borrowers."

From Bloomberg. "Commerzbank AG, Germany's second- largest bank, took a 291 million-euro writedown on its 1.2 billion euros of investments linked to U.S. subprime mortgages after record foreclosures on home loans to borrowers with poor credit histories rattled debt markets."

"The credit contraction has saddled the world's biggest lenders and securities firms with more than $40 billion of writedowns during the past four months."

"Citigroup Inc., the largest U.S. bank by assets, provided $7.6 billion of emergency financing to the seven structured investment vehicles it runs after the SIVs struggled to repay maturing debt."

"'The current lack of liquidity in the asset-backed commercial paper market and the resulting slowdown of the CP market for SIV-issued CP have put significant pressure on the ability of all SIVs, including the Citi-advised SIVs, to refinance maturing commercial paper,' Citigroup said."

"Citigroup, which created the first SIV in 1988, is the largest manager of the investment companies."

The Wall Street Journal. "Only last week, Citigroup was telling anyone who would listen that it had a mere $70 million in 'indirect exposure' to the subprime mortgage mess. This week, Citi CEO Charles Prince has resigned, Citi is looking at another $8 billion to $11 billion in writeoffs, and some observers are questioning whether Citigroup has the resources to absorb all of the losses."

"More pain ahead was the theme for this year's ABS East conference where panelists warned that the worst is yet to come for U.S. subprime mortgages and those securities tied to it."

"In an opening panel discussion on the state of the structured finance market, investors and issuers agreed that falling home prices, rising defaults and foreclosures along with tighter credit left the U.S. housing market in a tailspin this year. But fallout in the future remained a key concern."

"'It's been a staggering blow. I think there's more to come,' said Paul Colonna, portfolio manager at GE Asset Management, during the panel discussion, referring to the subprime mortgage crisis."

"Colonna said the biggest surprise to him this year, was not the rising delinquencies or declining home prices in the housing sector, but the big disruption to other markets."

"'The 90-day T-bill auction in August was a bigger surprise to me. That sent a huge warning to the world that we're in a liquidity crunch,' said Colonna. 'We didn't even know where rates were in Treasuries then. The U.S. government didn't know where it was going to finance itself.'"

"'There's a major crisis of confidence right now and investors need to be reassured. People are not addressing issues of transparency in ABCP and SIV's portfolios and their pricings,' said one investor, who spoke on condition of anonymity. 'The problem in asset-backeds is that the people who are originating are also taking losses.'"

"At the conclusion of the discussion, the moderator asked panelists what would make the ABS market feel normal again -- to which participants responded, an entire restructuring of the structured finance market."

The Scotsman. "Howard Archer, the chief UK economist of Global Insight, said: 'What has become clear is that the problems associated with the subprime mortgages in America will carry on for some time to come.'"

"'It was hoped, back in August, that it would quickly pass, but that was always fanciful. The problem is no-one is really sure who is liable for these debts, as they can be bundled up and repackaged on,' he said."

"It has been estimated there could be as much as £100 billion in subprime loans circulating in the system. Peter Hahn, a former Citigroup executive, said: 'We have accounted for £20 billion, but what about the other £80 billion? It leaves a lot of big questions.'"

The Independent. "The banks remain unwilling to lend to each other, preferring to rebuild their balance sheets and 'hoard liquidity' to buttress themselves against any shocks from repatriating off-balance-sheet losses from their special investment vehicles. However, this tightening up has led to a vicious circle."

"Samir Shah at Landsbanki Securities said: 'People thought most of the bad news had been priced in. It seems we’re entering a second phase of the credit squeeze. We’re going back to a place where liquidity is drying up and volatility is increasing.'"

"'There is a concern about the extent of the debts among the banks generally and who will be left holding the debt,' Richard Hunter, of Hargreaves Lansdown, said. 'There’s a read-across to Barclays Capital. People are concerned about the exposure it has.'"

"Bank of England Governor Mervyn King said it may take months before commercial banks publish their full losses from the U.S. subprime mortgage slump."

"King's assessment of banking conditions is correct, said Martin Weale, director of a research group funded by the Bank of England and the U.K. Treasury."

"'In October we saw people saying things were getting better but that's turned out to be a bit of a mirage,' Weale said. 'The wholesale market is still very tight. Banks are now getting into a situation where they are short of capital.'"

"Fitch Ratings said on Tuesday that it may cut the AAA ratings of bond insurers after an upcoming review of their exposure to complex collateralized debt obligations."

"If the ratings of one or more of the bond insurers are cut, the rating on the bonds they insure will fall too. This may force some investors who can only hold very secure debt to sell, depressing prices which would already be under pressure."

"It could also touch off another round of writedowns by banks, insurance companies and others who hold instruments insured by these companies."

"UBS estimates that bond insurers back about $2.2 trillion worth of debt, mostly subprime mortgage-backed securities and municipal bonds."

United Press International. "The U.S. subprime mortgage crisis probably will worsen over the next 12 months before improving, a Federal Reserve governor said Monday."

"'(Two) conditions suggest that conditions for subprime borrowers have the potential to get worse before they get better,' Federal Reserve Governor Randall S. Kroszner said. The conditions are indications of a weakening in housing activity and the second is that 'the bulk of resets is yet to come,' he said."

"For each quarter from now until the end of next year, on average, monthly payments for more than 400,000 subprime mortgages are scheduled to undergo their first interest adjustment, up from the roughly 200,000 per quarter during the first half of 2007."

"'Delinquencies and foreclosures are therefore likely to continue to rise for a number of quarters,' Kroszner said."

"Former Federal Reserve Chairman Alan Greenspan and billionaire investor George Soros said the downturn in the U.S. housing market had yet to take its full toll on growth."

"Greenspan told a forum that high inventories of unsold homes presented a major risk to the U.S. economy and that he was not sanguine about how quickly the glut could be reduced."

"'We still need to accelerate the rate of inventory liquidation, and that will mean bringing housing starts down and sales up. We have a long way to go,' said Greenspan."

"Former Federal Reserve Chairman Alan Greenspan said Tuesday that cutting excess home inventories in the United States is key to stabilize the financial system at home and the rest of the world."

"'The critical issue on the whole subprime, and by extension, the international financial system rests very narrowly on getting rid of probably 200,000-300,000 excess units in inventory,' Greenspan told a business leaders' forum."

"The former Fed chairman urged central banks to avoid suppressing asset bubbles, which is 'exceptionally difficult' to do."