Some housing bubble news from Wall Street and Washington. Bloomberg, "Wells Fargo & Co., the biggest bank on the U.S. West Coast, said fourth-quarter profit declined as borrowers fell behind on $1.56 billion of loans. Net charge-offs, the cost of bad loans that won't be fully repaid, jumped to $1.2 billion from $892 million in the third quarter. The bank said the provision for future loan losses almost tripled to $2.6 billion."

"'Given the weakness in housing and the overall state of the U.S. economy, it is likely that net charge-offs will be higher in 2008,' said Mike Loughlin, chief credit officer."

"Wells Fargo is the second-largest U.S. mortgage lender after Countrywide Financial Corp."

From MarketWatch. "J.P. Morgan Chase said Wednesday its fourth-quarter profit fell 34%, driven down by a $1.3 billion write-down of subprime assets and deteriorating performance in its home equity business, and a big drop in investment-banking activity."

"'Our lower quarterly results were affected by the investment bank's markdowns in subprime-related positions and weaker trading. In addition, our consumer home equity and subprime loan portfolios performed worse than we expected,' CEO Jamie Dimon said."

The Journal Sentinel. "Development loans that turned sour in the struggling housing market, Marshall & Ilsley Corp. said. M&I said it wrote off $192 million in bad loans, many of them tied to the real estate construction industry in the bank's Florida and Arizona markets. The Milwaukee-based bank also added $235 million to its reserves in the quarter to cover potentially bad debt."

"Ambac Financial Group Inc. ousted its CEO, slashed the dividend 67 percent and will raise more than $1 billion to preserve its AAA credit rating after announcing the biggest-ever writedowns by a bond insurer."

"Ambac will report a loss after reducing the value of securities it guarantees by $3.5 billion, according to a statement today."

"Ratings companies are threatening to lower the credit rankings of Ambac and its largest competitor MBIA after their guarantees of bonds linked to subprime mortgages began plunging in value."

"Bondholders in structured investment vehicles, caught in the collapse of the subprime mortgage market, suffered a 47 percent drop in the value of their investments, according to Moody's Investors Service."

"Mortgage debt made up 23 percent of SIV assets, with most having no direct subprime link, Moody's said in July."

"In some cases, 'dramatically low' prices have been quoted, Moody's said, citing one SIV that received bids averaging 7 percent of face value for a collateralized debt obligation with the highest Aaa credit ratings."

The Associated Press. "Credit rating agency Standard & Poor's said Tuesday it is increasing its loss assumptions for subprime mortgages originated in 2006 and packaged in bonds sold to investors."

"When reviewing ratings, S&P will now assume a 19 percent loss rate on 2006-vintage subprime loans, compared with a 14 percent loss assumption previously. Cumulative losses from 2006-vintage subprime bonds have more than doubled since July 2007."

"Once S&P is finished adjusting its ratings assumptions, it will review all outstanding mortgage-backed debt. Bonds and debt originated in 2005, 2006 and 2007 are likely to be affected the most because they are more sensitive to the current weakening in the market, S&P said in a statement."

From CNN Money. "The number of adjustable-rate mortgages issued by lenders declined in 2007 as loan delinquencies and economic problems took their toll on interest rate discounts, according to Freddie Mac's annual ARM survey."

"As of October 2007, the government-sponsored loan buyer said, ARMs made up 17 percent of loan applications, their lowest level since June 2003."

"Over the past year, delinquency rates on ARMs surpassed those of fixed rate mortgages, according to Freddie's chief economist Frank Nothaft. Rates hit 3.1 percent in September, as opposed to the 0.8 percent delinquency rate of prime fixed-rate loans."

The Boston Globe. "The Massachusetts Attorney General Martha Coakley asked a state court yesterday to block Fremont Investment & Loan from commencing foreclosure actions against 500 borrowers in Massachusetts."

"Attorneys from her office told a Suffolk Superior Court judge the state wants to review each mortgage that is subject to foreclosure and try to stop proceedings on any loans they believe were made fraudulently."

"An attorney for Fremont, James Carroll, challenged the state's request. 'We cannot hand over that decision-making power to the attorney general,' he said. 'That would be unprecedented.'"

"Fremont mortgages were 'a recipe for disaster,' and Fremont was aware its mortgages contained 'multiple layers of risk' to borrowers, said Jean Healey, assistant attorney general."

"In the request for an injunction, state lawyers argued the loans were 'structurally unfair' and Fremont made them without regard to borrowers' ability to pay."

The Gatehouse News Service. "In response to the housing crisis, U.S. Rep. Phil Hare has called for a moratorium on home foreclosures. Hare said the government cannot bail everyone out, but it has to start by imposing a moratorium on foreclosures, he suggested maybe for 90 or 120 days."

"'If we don't, we're looking at a hit to the economy that will absolutely make sure we are in recession,' he said. 'It doesn't do anyone any good at all to repo homes.'"

"While Hare did not let consumers off the hook entirely, he puts much of the blame for the problems on real estate agents who artificially increased home prices and steered people to loans they knew the buyer couldn't afford."

"'These are professionals who knew they weren't going to make it. I think you have an obligation to go after these guys ... they've been there and done that and know what it means. People don't, unfortunately, read all the paper work,' he said."

"Hare said he knows firsthand how destructive losing a home can be. After his father lost his home, he became an alcoholic."

"'My dad was never the same after that, and he never did anything wrong,' he said. 'Everything he worked for was gone.'"

From CBS 5.com. "Contra Costa County Supervisors passed a resolution Tuesday asking subprime mortgage lenders to voluntarily agree to a six-month moratorium on foreclosures in the county."

"'It's no secret that Contra Costa, Solano and Alameda County are the hardest hit counties in the Bay Area,' Supervisor John Gioia said."

The Detroit News. "Southeastern Michigan homebuilders in 2007 had their slowest year since at least 1969, according to data released by Housing Consultants Inc."

"The report showed that only 3,482 permits for new homes and condominiums were issued in 2007 in Wayne, Oakland, Macomb and Livingston counties, a 48.1 percent drop from 2006. That's the lowest recorded number of permits issued since the region's county governments began reporting the numbers to the Southeast Michigan Council of Governments in 1969."

From Builder Online. "The continued existence of Kimball Hill Homes, one of the housing industry's largest privately owned builders, as a business entity now hinges on the outcome of its negotiations with lenders over the terms of its debt and finding some way to stop the cash draining from its operations."

"In its 10-k filing, which had been delayed for several weeks, Kimball Hill reported that it's lost $220.5 million in the year ended Sept. 30, 2007, exacerbated by $240 million in impairment charges."

"As a result of this erosion in buyer demand and its impairments, Kimball Hill's operations incurred negative cash flow of $17.1 million, and its net worth fell below levels for one of the covenants in its senior credit facility."

"In its 10-k...it states that it has 'substantial doubts about whether we will be able to continue as a going concern.'"

The Chicago Tribune. "'The company's losses from operations and default under its senior credit facility raise substantial doubts about its ability to continue as a going concern,' auditor Deloitte & Touchee said in a letter that accompanied Kimball Hill's filing, which is required because the company's debt is publicly traded. The company itself is privately held."

"In the filing, Kimball Hill said, 'We are not in compliance' with the loan terms. 'We are currently unable to borrow additional amounts" under the senior credit facility.'"

"In 2006, Kimball Hill built 4,000 homes and had more than $1 billion in sales. Numerous Chicago-area home builders have reduced staffs, cut prices and offered special financing and other incentives to buyers in an effort to spur sales in a weak housing market."

"Analysts have reported that new-home starts in Chicago fell to 17,000 over the last year, off from a peak of about 32,000 when the industry was at its high point two years ago."

"In today's troubled housing market the dreams of the Chicago Spire developer will meet reality when its sales office opens."

"After a four-month delay, Dublin-based Shelbourne Development Ltd. will start selling the 1,194 super-luxury units it plans to build in a twisting 2,000-foot-tall tower designed by architect Santiago Calatrava."

"'There's interest in the building because it's one-of-a-kind,' a Shelbourne spokeswoman said last week. With most units priced from $750,000 to $15 million, she added, 'it will appeal to a specific audience.'"

"'In this market, for the Spire to get several hundred contracts to move ahead with construction will be difficult,' said James M. Kinney, president of a Chicago-based, high-end broker."

"'If they introduce 600 units priced at $2 million or more, that's a 71/2-year supply for the downtown Chicago luxury market,' Kinney added."

The Memphis Daily News. "New Q4 residential building permits in Shelby County were down 63.7 percent compared to permit numbers for fourth quarter 2006, according to the most recent data."

"The decline has been gradual but noticeable after two record-breaking years for local homebuilders."

"'It's always kind of ebb and flow,' Memphis Area Home Builders Association president Doug Collins told The Daily News. 'There's a shortage, so we build a bunch of houses to catch up. And then at some point we get caught up and nobody told us that the numbers were going to fall. Then we've got inventory and we've got to reduce it.'"

The National Association of Homebuilders. "Builder confidence in the market for new single-family homes was virtually unchanged for a fourth consecutive month in January as mortgage-market problems and inventory issues continued to pose challenges, according to the latest NAHB/Wells Fargo Housing Market Index."

"'Builders are taking a realistic view of the continuing housing market correction and doing what they should to get inventories under control and restore greater balance to the supply and demand equation,' noted NAHB President Brian Catalde, a home builder from El Segundo, Calif."

"In January, the index gauging current sales conditions for single-family homes remained unchanged at 19, while the index gauging sales expectations for the next six months rose two points to 28. Meanwhile, the index gauging traffic of prospective buyers rose one point to 14."

"Scores for each component are then used to calculate a seasonally adjusted index where any number over 50 indicates that more builders view sales conditions as good than poor."

"'Builders are anticipating a time when market conditions will support an upswing in building activity – most likely in the second half of 2008,' said NAHB Chief Economist David Seiders."