Some housing bubble news from Wall Street and Washington. Associated Press, "HSBC Holdings PLC said Wednesday it was taking a $3.4 billion charge against third-quarter profits because of accelerating losses in its HSBC Finance Corp. mortgage business in the United States. 'There is the probability of further deterioration if the current housing market distress continues and further impacts the broader economy,' the company said."

From Bloomberg. "Bank of America Corp., the nation's second-largest bank, may need to write down $3 billion in debt securities in the fourth quarter that have lost value because of defaults on subprime mortgages."

"'As market conditions change and possibly worsen, there could be additional diminution in value,' said Chief Financial Officer Joseph Price. 'There is complexity and difficulty in estimating the value of these positions, especially the collateralized debt obligations.'"

From Dow Jones Newswire. "Bear Stearns Cos. said it expects to record a loss in its fiscal fourth quarter after taking a write-down it currently estimates at about $1.2 billion. The losses relate to the company's heavy exposure to rapidly deteriorating residential mortgages, mortgage securities and collateralized debt obligations."

"'Our view on the mortgage market is bearish,' Bear Stearns Chief Financial Officer Samuel Molinaro said. 'Fundamentals continue to be very challenging and deteriorating."

"Molinaro said the $1.2 billion write-down it has taken to date in the fourth quarter potentially could get worse before the quarter ends in two weeks. 'We like to hope we have the worst of the mortgage marks behind us,' he said, 'but people keep saying that every quarter.'"

"Bank of Montreal and National Bank of Canada may write down a combined C$1 billion ($1.05 billion) for investments in asset-backed securities, adding to the C$787 million in writedowns already announced by Canadian banks, Scotia Capital analyst Kevin Choquette said."

"The Florida agency that manages about $50 billion of short-term investments for the state, school districts and local governments holds $2.2 billion of debt that was cut below investment grade. The data from Florida shows how far the effects of the bursting of the housing bubble are being felt as complex investment vehicles once marketed as high-yielding safe havens are now backed by collateral shunned by investors."

"Florida isn't the only government whose short-term investments have been affected by rising mortgage defaults in the U.S. and investors' diminished appetite for the securities tied to them."

"'I think there are other communities that are going to follow, probably a lot of them,' former U.S. Securities and Exchange Commission Chairman Arthur Levitt said today."

From Reuters. "Mizuho Financial Group Inc, Japan's second-largest bank, posted a 17 percent drop in its first-half profit and cut its full-year forecast on Wednesday, after the subprime-market turmoil sparked losses at its brokerage unit and increased credit costs."

"The bank said it had a total of 800 billion yen ($7.2 billion) invested in products related to residential mortgage-backed securities (RMBS), with 106 billion yen of that exposed to the subprime-mortgage market."

"'These (subprime) products have all had their ratings downgraded and there is very little liquidity. The market just keeps going down,' President Terunobu Maeda told a news conference. 'In a sense, the market is crashing and you can't accurately determine prices.'"

The Independent. "Larry Fink, whose fund management firm BlackRock helped create the market for mortgage-backed securities, echoed predictions that the crisis could get 'a lot worse.' He told attendees: 'Many institutions don't understand what the credit crunch is going to do to earnings and their balance sheet.'"

"The main credit rating agencies have admitted to MPs that they failed to spot the looming credit crunch and that investors had taken their positive ratings as a 'green light' to buy opaque securities. 'In hindsight we would have rated them differently,' said Ian Bell, head of European structured finance at Standard & Poor's, referring to credit products whose values crashed after 9 August."

"The agencies said they had earned fees from Northern Rock for rating its securities, but that these played no part in their failure to downgrade the mortgage bank between itsinterim results in July and the Bank of England's emergency funding on 14 September."

"'Why was it none of you flagged up after July the danger facing Northern Rock?' asked Michael Fallon, the committee's senior Conservative member."

"Mr Bell said: 'August took everyone by surprise. We did not see a way in which the sub-prime crisis would ripple throughout the markets of the world to affect a bank like Northern Rock.'"

National Mortgage News. "According to the Mortgage Bankers Association, the mortgage lending industry has lost billions of dollars as a result of fraud and the sum is steadily rising. The FBI has estimated that fraud cost mortgage lenders as much as $4.2 billion in 2006 alone."

"'We do not need more federal laws to combat fraud. Instead, we need a more coordinated effort and more resources to investigate and prosecute,' said Jonathan L. Kempner, president and CEO of the MBA. 'In addition to being illegal and costly, we know that fraud has also contributed to the recent rise in delinquencies and foreclosures, and the industry and government must step up our anti-fraud efforts to help curtail these related problems.'"

"Losses to banks and investors from the subprime mortgage crisis could rise to $480 billion in coming years, analysts at UBS AG said in a research note published late on Tuesday."

"The possible hit between $380 billion and $480 billion is based on a 'reasonable' loss rate assumption of 44 percent as home prices decline, the New York-based analysts, led by Laurie Goodman, said in the note. Some $85 billion of the losses may come from collateralized debt obligations, or CDOs, they said."

"Determining what percentage of losses have been realized is impossible, however, the analysts said. 'We do not get sucked into believing that recovery depends on loss recognition by all investors,' they wrote. 'Rather, we argue the real problem is that large sections of the MBS market are frozen, with little price discovery.'"

The Wall Street Journal. "The tumbling housing market is claiming a new class of victim: customers of insolvent home builders. And the situation is likely to worsen in the first half of next year, says Ivy Zelman, an independent housing analyst. 'We're in the first or second inning,' Ms. Zelman says. 'There are going to be a significant number of insolvent builders.'"

"As the housing market has slumped, builders have struggled with rising inventories, falling home prices and cancellation rates that have topped 40% in some markets. Land prices have also dropped, leaving builders owing more for some parcels than those properties are now worth."

"Banks, meanwhile, are tightening their standards -- not only for home buyers, but for the builders as well."

"Jeff Benes and Maggie Byrne paid $269,000 for a four-bedroom Homes Inc. home in Antioch, Ill., in 2003. Now they are wondering what the company's bankruptcy filing will mean for property values -- not to mention who will plow the development's unfinished streets this winter and when the promised clubhouse, pool and volleyball courts will be completed."

"'We're all up in the air now not knowing what is going to happen,' says Ms. Byrne."

The Seattle PI. "Seattle is becoming a 'superstar' market, where housing costs may never settle back into historical relationships to incomes, the National Association of Realtors, association Chief Economist Lawrence Yun declared on Tuesday."

"It's also possible that some are joining the ranks of international cities like London, Paris, San Francisco and New York, where costs are less tied to incomes, he said. 'Now I'm beginning to think: Miami, Seattle, are they becoming superstar markets?'"

"Asked if there was a housing bubble, Yun said there was a lending bubble and some markets might have had a bubble in home prices, but national prices have proved 'exceptionally resilient.'"

"Realtors' officials continued to blame everyone but themselves for problems in the housing market, while saying it would recover quickly. Greedy lenders and investors put out bad loans, then overreacted when some turned out to be problematic, Yun said."

"'The word that usually follows after greed is fear,' he said. 'We went through a cycle of fear in 2007.'"

"The media, meanwhile, played up problems in the market, Yun said. 'They have a natural bias of wanting to sensationalize all the news items.' And, while many markets remained healthy, he said: 'The local media, many are just very lazy. They just copy the national stories and put them in their local papers.'"

"At a news conference later...Association Public Affairs Director Lucien Salvant stepped in to keep newly installed Association President Richard Gaylord from answering a question about the faulty prediction record of Yun's predecessor, David Lereah."

"'David Lereah doesn't work for (the association) anymore,' Salvant said. 'His predictions were his predictions at the time.'"

"Pressed on Realtors' possible responsibility for market problems at his own news conference, Yun noted that there are 1.36 million Realtors. 'Certainly some are guilty,' he said, adding that Realtors do have a responsibility to advise their clients against paying too much or getting in over their heads."

"John Tuccillo, a former Realtors' chief economist, was considerably harsher."

"'The system stinks because on the front end of the market are people who close the loans and walk away with no responsibility and pocket their checks,' he told an audience of Realtors during a presentation, drawing a round of applause."

"'Why are you clapping?' he asked. 'I'm including you.'"