Some housing bubble news from Wall Street and Washington. Bloomberg, "Ambac Financial Group Inc., the first bond insurer to be stripped of its AAA credit rating, reported its biggest-ever loss after writing down the value of guarantees on subprime debt by $5.21 billion, according to a statement by the company today. Ambac's loss reported today followed the company's first- ever loss in the third quarter. Before 2007, Ambac had reported profit increases every year for the past decade."

"Prices for credit-default swaps that pay investors if Ambac can't meet its debt obligations imply a 72 percent chance it will default in the next five years, according to a JPMorgan Chase & Co."

"'In retrospect, insurers wish they'd never heard the term structured finance, much less written the business,' said Donald Light, an insurance analyst."

The Associated Press. "Fitch said it cut Ambac's ratings because the company does not have enough capital reserves to cover the higher potential defaults. MBIA raised $1 billion in capital last week to boost its reserves, but Ambac balked at such a move, saying the market conditions were not optimal."

"Business slowed sharply in the quarter, with net premiums written dropping 78 percent to $49.3 million."

"Bank of America Corp., the second- largest U.S. bank, said earnings dropped 95 percent after $5.28 billion of mortgage-related writedowns and higher provisions for future loan losses."

"The writedown was 76 percent more than the $3 billion that Chief Financial Officer Joe Price estimated on Nov. 13."

"Wachovia Corp., the fourth-largest U.S. bank, said profit fell 98 percent to its lowest since 2001 after writedowns for bad loans and mortgage-backed securities."

"The provision for credit losses rose to $1.5 billion. Holdings backed by commercial real estate mortgages were written down by $600 million."

"Wachovia has dropped almost 45 percent in New York trading since CEO Kennedy Thompson acquired Golden West Financial Corp. for $24.6 billion in October 2006 just before the housing market peaked. Since then, U.S. home sales have slumped 21 percent, prompting Thompson to call industry conditions the 'toughest' in his 32 years of banking."

"'They've got a tiger by the tail in Golden West and I don't think they know what to do,' said Nancy Bush, an independent bank analyst."

From CNN Money. "National City Corp. swung to a fourth-quarter net loss as the mortgage company was badly hurt by the subprime-mortgage crisis. Revenue dropped 40% to $1.7 billion."

"The latest quarter's results include $181 million, in mortgage-related charges and a loan-loss provision of $691 million resulting from higher credit losses on liquidating portfolios of nonconforming mortgage and out-of-footprint home equity loans, as well as other mortgage loans."

"Nonperforming assets were $1.5 billion at Dec. 31, or 1.31% of loans, more than double $732 million a year ago, primarily due to a larger number of delinquent residential real estate loans."

"National City, among the nation's biggest mortgage firms, has traditionally been known for its conservatism and 'Midwestern common sense.' Its weak results are a sign that the credit crisis is spreading deeper among traditional banks."

"The company had hoped that subprime loans and a larger geographic base would help it overcome slow growth closer to home, but the company now concedes that it made mistakes."

The Indy Star. "Property appraisers helped exaggerate U.S. home values by as much as 10 percent in 2006, contributing to a record number of foreclosures because borrowers ended up owing more than their homes were worth."

"The dollar equivalent of that 10 percent? $135 billion. Those figures come from Susan Wachter, a real estate professor at the University of Pennsylvania's Wharton School."

"Lenders and mortgage brokers routinely pressured appraisers to boost values, said Jonathan Miller, a New York property appraiser for two decades."

"And appraisers accepted those pressures, said Brett Martin, who owns Indianapolis Appraisal Associates. 'There's a saying that a good appraiser can make $50,000 a year, and a bad one can make $200,000,' he said."

"Debbie Huber of Las Vegas says a third of the lenders who want to hire her are looking for a guaranteed value before she appraises the property. 'We get calls like that every hour of every day,' said Huber, past president of the Nevada Appraisal Commission, the state agency that oversees appraisers."

The Boston Herald. "Local activists vow to begin this week physically blocking eviction of Bostonians who lose homes to foreclosures - even if protesters wind up in jail."

"'We feel stopping evictions is important enough that if arrests are necessary, some people will be arrested,' said Steve Meacham of City Life, a Jamaica Plain group that plans to launch a civil-disobedience campaign tomorrow."

"City Life wants lenders to either rent seized properties back to former owners or sell homes to nonprofits for use as affordable housing."

"'That would be a way out of this crisis that we think would be better for everyone,' Meacham said. 'Yes, banks are going to lose some money, but they’re going to lose money anyway, because these properties are no longer worth as much as the mortgages on them.'"

The New York Times. "Marty Ummel feels she paid too much for her house. So do millions of other people who bought at the peak of the housing boom. What makes Ms. Ummel different is that she is suing her agent, saying it was all his fault."

"Ms. Ummel claims that the agent hid the information that similar homes in the neighborhood were selling for less because he feared she would back out and he would lose his $30,000 commission."

"For decades, residential transactions almost always involved brokers who, whatever assistance they gave the buyer, legally represented only the seller. The long boom that began in the late 1990s put an end to that one-sided world. As prices spiked, buyer’s agents and brokers became popular as sounding boards, advisers and negotiators."

"That makes this the first housing collapse in which large numbers of buyers had a real estate professional explicitly looking after their interests."

"The Ummel case poses the question: In a relationship built on trust, where promises are rarely written down and where — as in this case — there is no signed contract, what are the exact obligations of these representatives in guiding their clients through a sizzling market?"

"The defendant in the Ummel case is Mike Little, a veteran agent. Little said that contrary to Ms. Ummel’s claims, the suit was motivated mainly by the declining market. 'When people see their home values and assets declining, they always feel there’s someone to blame,' he said. 'This is a dangerous time for all of us in the industry.'"

"A wave of lawsuits is beginning to wash over the troubled mortgage market and the rest of the financial world. Homeowners are suing mortgage lenders. Mortgage lenders are suing Wall Street banks. Wall Street banks are suing loan specialists. And investors are suing everyone."

"Everyone wants to know who is to blame for the losses paining Wall Street and homeowners. The answer, it seems, is someone else."

"'It will be a multiring circus,' said Joseph A. Grundfest, a professor of law and business and co-director of the Rock Center for Corporate Governance at Stanford. 'This particular species of litigation will be manifest in many different types of lawsuits in many different jurisdictions.'"

"Two questions lie at the heart of many of the cases. The first is whether lenders and investment banks alerted borrowers and investors to the risks posed by subprime loans or securities backed by them. The second is how much they were legally obliged to disclose."

"'What strikes me here is that this a tainted system from A to Z,' said Tamar Frankel, a law professor at Boston University. 'Everybody blames everybody else. If you look at what is being said, there isn’t one who doesn’t blame another and there is half-truth in everything.'"

The Plain Dealer. "For almost a century, politicians from the White House to City Hall have pushed and prodded us to own a home. The result: Nearly seven in 10 families own rather than rent."

"But now, as foreclosures throw tens of thousands of people in Greater Cleveland out of their homes, the question arises: Did government go too far?"

"Here are some of the ways government has promoted homeownership: The Federal Reserve Bank, which influences credit by setting the interest rate that banks charge each other, let mortgage rates remain at historic lows this decade, even as analysts warned that housing prices would flatten."

"When the prices did flatten, many borrowers were left unable to sell because their houses were worth less than what they owed."

"'It was a bubble that had to burst,' says Stuart Feldstein, head of SMR Research, a company that studies mortgages and other lending. 'Nobody was paying attention.'"

"The federal government gives homeowners $150 billion a year in income-tax deductions and other tax breaks, says George McCarthy, who analyzes homeownership campaigns for the Ford Foundation."

"That's 4½ times the annual budget of the Department of Housing and Urban Development, the main government sponsor of low-income rental housing."

"The income-tax deduction for mortgage interest gained luster in 1986, when Congress scrapped deductions for credit card and other consumer debt. Homeowners also were allowed to continue claiming credit for property taxes."

"Mortgage guarantees, through the Federal Housing Administration and the Department of Veterans Affairs, let borrowers get by with little or no down payment."

"The VA's guarantee of zero-down loans for World War II veterans began the mortgage industry's long slide into looser standards, says Tom Bier, a housing researcher at Cleveland State University."

"Fannie Mae and Freddie Mac, federally chartered corporations, buy mortgages. That gives lenders cash to make more home loans."

"Researchers say the pair served as models for the Wall Street-led secondary market that emerged in the 1990s and crashed a decade later under the weight of high-interest loans made to people with bad credit."

"The federal Community Reinvestment Act requires banks to lend money in neighborhoods where they have branches."

"Under pressure from regulators, banks grudgingly lent money in low-income and minority neighborhoods in the 1990s, and discovered an untapped market. In Cleveland, unregulated mortgage companies joined in and became dominant in neighborhoods where foreclosures now rage."

The Desmoines Register. "Jim Anderson set a Decatur County record after paying $4,000 an acre for a 75-acre farm."

"'It's pretty good ground,' Anderson said Friday after he outbid about 20 other people, including bidders from California, Illinois and northern Iowa. Decatur County typically has the lowest-priced farmland in Iowa, with an average price last year of $1,828 an acre."

"The record-breaking bidding underscored the fact that these are high times down on the farm, where high prices for crops and farmland are sending U.S. agriculture to altitudes never seen before."

"In Iowa and the three other states covered by Farm Credit Services of America, a leading agricultural lender, farmland prices have risen 20 percent or more in the past year, said Kirk Manker, chief appraiser of the bank."

"Iowa State University Extension economist Michael Duffy, who conducts an annual survey of Iowa farmland prices, said he thinks Iowa's farmland market will be strong for at least five years. 'We have seen a fundamental shift in demand for corn due to ethanol production,' Duffy said. 'I don't think this demand will diminish in the near future.'"

"Iowa farmland set a record in 2007 for the fifth year in a row, Duffy's survey showed, rising to an average of $3,908 an acre, 22 percent more than a year ago. It was the largest one-year increase since 1976."

"Murray Wise of a leading Midwestern farm real estate brokerage based in Champaign, Ill., said the Iowa farmland market 'is hotter than most, but Illinois, Indiana and Ohio follow close behind.'"

"'This is a demand-driven market,' Wise said. 'It's only the second one in history.'"

"The first demand market occurred in the early 1970s, when the Soviet Union purchased large quantities of U.S. grains, Wise said. That demand market only lasted about a year. 'It's a different world out there,' Wise said. 'The good times are here for an extended period of time.'"

"One spillover from the housing market downturn, Wise said, is a shift of capital from mortgages to agriculture. 'East Coast lenders are saying they want to go into agriculture,' he said. 'Capital wants a home in U.S. ag.'"