Some housing bubble news from Wall Street and Washington. LA Times, "Countrywide Financial Corp.'s future was called into question again Wednesday after it reported another rise in loan delinquencies and foreclosures, fueling fresh speculation that the company was headed toward bankruptcy. The nation's biggest mortgage lender was 'withering' and 'might falter if it does not receive an infusion of at least $4 billion within the next couple of weeks,' said Egan-Jones Ratings Co., an advisor to pension funds and other big investors."

"Weiss Research, which rates the condition of lenders, said the Calabasas company 'is on a collision course with bankruptcy,' adding that it 'exhausted many of its extraordinary financing options last year and is ill-prepared for the rising mortgage defaults and home foreclosures that are widely expected this year.'"

"On Wednesday, some customers at Countrywide Bank's Glendale branch said they were...trying to determine whether the favorable terms offered were worth the risk. Fred Campi of Silver Lake decided it wasn't. He was at the bank to withdraw four certificates of deposit, cashing out a total of $60,000."

"Campi, an administrative aide at Los Angeles City College, said he didn't want to risk losing access to his funds, even temporarily. 'I don't know if it's worth the crapshoot,' Campi said."

The Washington Post. "Countrywide Financial reported yesterday that foreclosures and late payments on mortgages in December soared to their highest levels in five years."

"Lehman Brothers analyst Bruce W. Harting wrote in a report yesterday that 'the extent of the deterioration is a surprise.' Steven Persky, chief executive of a Los Angeles investment adviser, said:'People are recognizing that foreclosures are skyrocketing beyond expectations.'"

"Countrywide, with a $1.5 trillion portfolio of loans, is so large that its failure may cause a crisis on Wall Street, which over the past few years has tied its fate to the mortgage industry by buying so many of the mortgage-backed securities these lenders produce, said Stuart Plesser, an equity analyst at Standard & Poor's."

"The housing market would suffer as well, he added. 'A customer's ability get a mortgage would be significantly impaired,' Plesser said."

"The worst may be ahead for home prices. Treasury Secretary Henry M. Paulson Jr. said yesterday that the housing market has not bottomed out. 'There's no evidence that is improving or bottoming, and as a matter of fact, I think the evidence would indicate that it is going to have further to run,' Paulson said on CNBC."

From Bloomberg. "Freddie Mac, the U.S. mortgage-finance company that lost a record $2 billion in the third quarter, may be downgraded by Moody's Investors Service because damage from loan defaults could be worse than the ratings company expected."

"Freddie Mac 'may experience higher credit losses than Moody's previous expectations,' Moody's analysts led by Brian L. Harris said in the report late yesterday. 'In its review, Moody's will focus on Freddie Mac's asset quality and the potential that the company may experience an elevated level of credit charges over the near to medium term.'"

"U.S. home prices may fall 12 percent from their peak through 2010 in 'the toughest housing correction in our lifetimes,' Fannie Mae CEO Daniel Mudd said this week."

"'Credit stress is most likely to occur in the company's guarantee portfolio,' Moody's said."

"(Freddie Mac) 'continues to have several options to manage its capital adequacy including raising additional capital, further reducing the dividend, or managing the size of its portfolio,' Moody's said."

"Bank Hapoalim Ltd. became the first Israeli lender to report losses from the collapse of the U.S. subprime mortgage market as it reduced the value of structured investment vehicles and mortgage-backed bonds by $380 million."

"It also wrote down $90 million related to mortgage securities, which won't result in a charge."

"Hapoalim said 98.8 percent of the mortgage-backed securities it owned had the highest AAA credit ratings. The investments were made through the bank's offices in London and New York."

The Street.com. "Huntington Bancshares was sliding to a 52-week low Thursday, after the bank said it expected a net loss primarily due to a $276 million charge, disclosed Jan. 3, tied to its relationship with subprime lender Franklin Credit Management."

"The bank is establishing a $406 million provision for credit losses due to exposure to bad mortgages and is reducing net interest income by $18 million. Huntington also increased its provision for non-Franklin-related credit losses by $106 million."

"Shares of WCI Communities plunged nearly 30% Wednesday as investors feared a bankruptcy at the Florida condo developer. The decline came after Standard & Poor's issued a note maintaining its junk rating and negative outlook on the company. The agency pointed out that the homebuilder faces 'acute liquidity challenges.'"

"'These challenges include the need to negotiate more liberal terms governing a $700 million secured revolver and a $263 million secured bank loan, including a modification of the company's fixed-charge covenant,' S&P said in a note."

The News Press. "'If WCI is unable to obtain the amendment or comply with its terms, the lenders would have the right to exercise remedies specified in the loan agreements, including foreclosing on certain collateral and accelerating the maturity of the loans,' the company said in a release."

The Orange County Register. "Irvine-based homebuilder Standard Pacific Homes has sold its holdings in two Southwestern U.S. housing markets, saying that the company is adjusting its business 'to changing market conditions.'"

"The company, which has seen a year of red ink, said it has sold its Tucson division and sold most of its excess land in San Antonio."

"The land includes finished lots as well as lots awaiting subdivision approvals, according to a press release.Meanwhile, Standard Pacific also sold its Southern Arizona division based in Tucson to a local developer from which it acquired the properties in 2004, according to the Arizona Daily Star and other Arizona Web sites."

"The Star reported that the deal consists of 700 vacant lots ready for home construction, plus 70 homes near or under construction."

"Lennar Corp.'s November sale of 11,000 properties in eight states set a price that may mark the bottom for the U.S. housing market: 40 cents on the dollar."

"That's how much Morgan Stanley Real Estate paid for an 80 percent stake in the 32 communities, 60 percent less than the price at which the properties were valued just two months earlier."

"As the U.S. housing slump drags into its third year, sellers will start cutting prices as much as it takes to find buyers, said Marcel Arsenault, a self-described 'vulture investor.' Properties will be available to buyers with the financial strength to ride out the slide. Now that a price has been set, all that's left is the waiting."

"'We're watching Denver, Phoenix, Austin and Tucson, but South Florida is our principal focus,' said Arsenault. 'If you're a vulture, Florida has more carrion. This stuff is lying on the ground. It's lost life. Some of the stuff in Phoenix is still breathing. Perhaps not for long.'"

"Arsenault said he and his three partners may buy a block of about 50 new, unsold condominiums in Orlando, Florida. They have a price in mind and they're willing to wait until they get it: 40 cents on the dollar."

"'There's a risk to buying too early in the downturn, but buying too expensive is our biggest pitfall,' he said."

"Lawrence Gottesdiener, chairman of Northland Investment Corp pounced last week when Tarragon Corp. offered five apartment complexes in Florida and another in South Carolina for $156 million."

"'I could say I bought for 50 cents on the dollar of last year's price, because I did, but I think that's a little bit of hyperbole because last year's price was last year,' Gottesdiener said."

"John Levy, a real estate investment banker in Richmond, Virginia, said he's planning a joint venture with a national builder to buy communities abandoned by bankrupt developers in the middle of construction. 'That's where you can buy at the biggest discount,' Levy said."

"The next bubble to deflate may be Alan Greenspan's reputation. Hailed as perhaps the greatest central banker who ever lived when he left the Federal Reserve in 2006, Greenspan is under attack from critics...for his handling of the 2000-2005 housing boom."

"At stake is not only Greenspan's legacy but also the future of policies he espoused during 18-1/2 years atop the central bank. Critics blame his aversion to regulation and reluctance to use interest rates to puncture asset bubbles for the boom in mortgage lending and house prices that has since gone bust, threatening to throw the economy into recession."

"Economist Allen Sinai said the Fed's experience is leading other central banks to rethink their approach to asset bubbles."

"'There is a growing body of thinking in central banking that one should not let these bubbles run and allow them to burst,' he said. 'They should lean against them.'"

"In an interview, Greenspan said such criticism ignores limits on what regulation and monetary policy can achieve. Greenspan said that, while the Fed's bank examiners were hard at work during the mortgage-lending boom, 'we have to be realistic about what regulators can and cannot do.'"

"'It is extremely rare to uncover fraud other than through whistle-blowers,' he said. 'You don't get at it through internal audits, you don't get it through outside audits and you certainly don't get it through bank examinations.'"

The Rocky Mountain News. "Last week, a woman called me and asked me for the number of the Colorado Foreclosure Hotline. She told me she wanted the number for her neighbor, not herself. She then asked me if there were any counselors who spoke Spanish at the hotline, as her neighbors don't speak much English. I assured her there are bilingual counselors at the hotline."

"Then she told me what really was the crux of her call. The couple next door had given a false Social Security number to the lender on their mortgage application. She said although they are hard-working, good citizens, she thinks they are in this country illegally."

"They are understandably worried that their fraud will be discovered and there would be no help for them." "In addition to the prospect of losing their home, they fear being deported. I said I didn't think that would happen. But honestly, I told her I thought they could be out of luck as far as getting help from their lender, since they were guilty of mortgage fraud."

"After I got off the phone with her, I wondered if I had given her the correct advice, so I called Zach Urban. Urban runs the Colorado Foreclosure Hotline."

"I asked Urban if the homeowners called their lender, and the lender discovered the phony Social Security number, would they turn the borrowers over to the Immigration and Naturalization Service, or some other agency?"

"'I have not seen any mortgage company that has any interaction with the INS,' Urban told me. 'And we certainly have no interaction with the INS. From our perspective, we are not police officers; we're housing counselors.'"

"But clearly it is a sticky issue for the counselors. 'They have presented false information,' Urban said. 'As with any type of fraud, they have been dishonest from the start. What gets to the heart of the issue is that it may not have seemed like fraud when they lied, or maybe it seemed so easy, or maybe it seemed everyone was doing at the time, when there were such lax underwriting standards.'"