Some housing bubble news from Wall Street and Washington. Bloomberg, "Citigroup Inc. posted the biggest loss in the U.S. bank's 196-year history as surging defaults on home loans forced it to write down the value of subprime-mortgage investments by $18 billion. The markdown on subprime securities is the biggest so far, exceeding the $14 billion reported by Zurich-based UBS AG, Europe's biggest bank."

"'They've got themselves in a deep, desperate hole and it's going to take them all of 2008 to work their way out of it,' Jon Fisher, who helps manage $22 billion at Fifth Third Asset Management, said in an interview on Bloomberg TV. Fifth Third owns shares of Citigroup. 'There are probably issues on their balance sheet that the management team, who's only really been running the company for about a month, doesn't even know about.'"

From Dealbreaker. "As they just discussed on the conference call, Citi still had $37.3 billion in direct and indirect subprime exposure at the end of the quarter. That's still a lot of risk on in asset classes that no-one can confidently value. Even Citigroup admits that it is just looking at the ABX and making intelligent guesses."

"Our high level quant skills tell us this leaves Citi with $29.3 billion in CDO exposure. What's worse, Citi's chief financial officer is stressing that there is no market against which to mark these asset backed CDOs. So these write downs are just mark-to-model. Educated guesses by the folks whose educated guesses got us into this mess in the first place."

From The Star. "Canadian Imperial Bank of Commerce, already reeling from its exposure to America's subprime meltdown, confirmed yesterday it will record another $2.46 billion (U.S.) in pre-tax writedowns."

"The lion's share of the bank's new subprime-related writedowns – some $2 billion (U.S.) worth – relate to counterparty hedge protection it bought from American bond insurer ACA Financial Guaranty Corp. Questions continue to swirl about the financial health of ACA after its credit rating was slashed by Standard & Poor's late last year."

"The remaining $462 million charge relates to CIBC's unhedged exposure to the subprime market."

The National Post. "Four months into the Canadian $35-billion ABCP fiasco and still investors have no idea about the status of their holdings. They may be sitting on the equivalent of AAA-rate securities, as suggested the other day by Purdy Crawford, chairman of the grandly named Pan Canadian Committee of Third Party ABCP Investors."

"Or, as some critics suggest, their investment values may have more in common with subprime mortages. Since no real information is coming out of the committee, who can tell?"

"What we also learned yesterday, however, is that a private underground market in ABCP paper is alive and kicking. Westaim Corp. of Calgary has agreed to sell 50% of its holdings in ABCP units. Originally valued at $17-million, the assets were written down to $14-million earlier, and now Westaim is selling half its ABCP portfolio for $6-million, off a book value of $7-million."

"The Westaim sale implies a writedown of up to 30%, which doesn't sound like AAA-rated material."

"If Westaim were not a public company, the deal would have remained a secret trading transaction in a $35-billion asset class that a vast cabal of major corporations, from the Caisse de depot et placement to major banks, have systematically conspired to keep out of any public market."

"Many ABCP owners need the cash to carry on business. Many transactions are believed to have closed, with some sellers accepting 80¢ on the dollar. Another story is that major investment houses are buying back the ABCP assets they sold at 100¢ on the dollar to keep their clients happy, and then unloading the assets into the underground market and quietly taking a loss."

The Pioneer Press. "Exposure to the subprime mortgage mess will cost St. Louis Park-based MoneyGram International Inc. more than $1 billion, the money transfer company said late Monday night."

"In October, MoneyGram said it would lose $230 million on mortgage-related investments, but warned that total losses could be higher. Those losses, yet to be incurred, now stand at $960 million, the company said in a press release issued Monday evening."

"The company spent another $200 million this month liquidating some of its problem securities."

The Orange County Business Journal. "Newport Beach-based Downey Financial Corp. says it has more bad loans than it stated earlier after reclassifying its balance sheet. Shares of Downey fell 13% on Monday, bringing its market value to about $680 million."

"Nearly $100 million of the company’s loans that were part of a refinancing program for troubled borrowers were reclassified as nonperforming assets, according to Downey."

"The loans were part of a 'borrower retention program,' which in December the company’s accountant KPMG LLP said should be considered nonperforming after initially saying in September that they were being accounted for correctly, according to a press release."

"In November Downey said nonperforming loans were 5.77% of its total assets. In October it said it had $323 million in nonperforming loans."

The Insurance Journal. "More than $170 billion has evaporated from the balance sheets of companies around the world as the result of the meltdown of the U.S. subprime mortgage market, reports Advisen Ltd., a provider of technology and data to the global commercial insurance industry."

"However, the $170 billion of writedowns may be only the tip of the iceberg, the research firm suggests in a special report...that tracks writedowns reported to date and the related lawsuits filed against those companies."

"Advisen estimates the 112 companies reporting writedowns may have as much as $1.2 trillion in collateralized debt obligations and other securities backed by subprime mortgages on their balance sheets. The crisis in the subprime mortgage market also has triggered an avalanche of lawsuits."

From MarketWatch. "Fewer people will be obtaining mortgages this year than in 2007, with total mortgage production expected to drop 16% to $1.96 trillion in 2008, the Mortgage Bankers Association said Monday."

"If the projections hold, it would be the first time since 2000 that total mortgage originations fall below $2 trillion, the group said."

"'The principal concern of the current credit crisis lies in the possibility that banks will eventually run out of capital,' said Doug Duncan, MBA's chief economist. 'Banks are running up against capital limits as they write down the value of assets at the same time they are putting loans on their balance sheets because the markets for securitized products are essentially closed.'"

"After total mortgage production decreases 16% in 2008, it will drop another 4% in 2009 to $1.88 trillion, the MBA predicts."

The Guardian. "Two of Britain's biggest mortgage lenders, Alliance & Leicester and Britannia building society, have doubled the minimum deposit demanded from first-time buyers in the latest sign that banks are anticipating a downturn in house prices."

"Borrowers will have to pay a minimum deposit of 10% on the price of a property compared with 5% before. According to Moneyfacts, 11 mortgage lenders have reduced the maximum loan-to-value ratios on some or all of their mortgage range since the beginning of December."

"This marked an about-turn from the position before the onset of the credit crunch, when lenders pushed loan-to-value ratios to highs of 130%, with 95% the norm."

"A spokeswoman for Britannia said: 'At the end of December, Britannia took the decision to impose a maximum loan-to-value limit on all products of 90%. This is due to the current external environment, with house prices falling over the last few months and the Council of Mortgage Lenders forecast that house prices will continue to fall in 2008.'"

"Taylor Wimpey Plc, the U.K.'s largest homebuilder, said orders fell 19 percent as of the end of last year as falling prices and tighter credit markets deterred buyers."

"Cancellation rates rose to more than 30 percent in the final quarter of 2007 from an average of about 20 percent, while reservations fell about 25 percent, Redfern said."

"Taylor Wimpey builds houses and apartments in the U.S. states of Arizona, Georgia, Texas, California and Florida, where it's the leading golf-course developer."

The Telegraph. "Fewer Brits are splashing out on holiday homes in the sun as higher mortgage repayments and concerns about the economy bite."

"The trend, which is further evidence that Brits are reining in their spending habits, emerged when Taylor Wimpey gave a trading update to the market this morning. The housebuilder warned that profits from its mainland Spain business would be 'well below' those achieved in 2006."

"In 2007, Taylor Wimpey sold 47 pc or 167 fewer homes in Spain and Gibraltar compared with 2006."

"CEO Peter Redfern said that the US market remained 'exceptionally challenging' and he expected that to continue throughout 2008. Completions in its North American business, which includes Canada, fell 24pc from 8,839 to 6,740, and prices fell 19pc from an average of £212,000 to £172,000."

"It emerged last week that Taylor Wimpey has told suppliers it intends to pay them 5pc less as the credit crunch bites into housebuilder profits. A letter was sent to its subcontractors, suppliers and consultants, which warned of imminent cuts and blamed them on a difficult 2007 which looked likely to continue in 2008."

"Mr Redfern played down the letter today: 'In any industry at any time it is normal to have an ongoing conversation about pricing. We don't see it as anything out of the ordinary.'"

The Orange County Register. "In a Securities and Exchange Commission filing, Newport Beach-based William Lyon Homes says...'On December 26, 2007 and January 7, 2008, William Lyon Homes, Inc., a California corporation, entered into ten separate purchase and sale agreements with various affiliates of Resmark Equity Partners, LLC.'"

"'Pursuant to the Resmark Agreements, Lyon California agreed to sell...604 residential lots and 5 model homes in 10 communities in Orange County, San Diego County, and Ventura County, California for an aggregate purchase price of $90.6 million in cash.'"

"'Prior to the sale, the collective net book value of these lots (as reflected in WLH’s financial statements) was approximately $210.7 million.'"

"By our math, that’s 43 cents on the dollar."