Some housing bubble news from Wall Street and Washington. Associated Press, "Toll Brothers Inc. said Wednesday that home building revenue fell by 22 percent in the first quarter, its seventh consecutive quarterly decline, and warned that it's 'not yet seeing much light at the end of the tunnel.' CEO Robert Toll, who months ago thought the housing market could be dancing along the bottom, said that despite historically low mortgage rates and falling home prices, a slowing economy could be spooking buyers.'

"'Buyers seem to be hiding,' he said in a statement. 'The market's problem is a lack of confidence, not just regarding the direction of home prices, but ... the overall economy.'"

"Net signed contracts, a sign of future activity, were cut in half to $375.3 million. In the quarter, 257 contracts valued at $198 million were cancelled. The cancellation rate came to 28.4 percent in the quarter, compared with 29.8 percent last year during the same period."

"In contracts, the Western states of California, Nevada, Arizona and Colorado plunged by 76 percent to $30.7 million. The North followed with 57 percent, the Mid-Atlantic at 37 percent and the South bled the least, down 26 percent."

"In contracts signed before cancellations, the average price per home fell 13 percent to $634,000. After taking account cancelled contracts, the average price fell to $580,000 as buyers backed out of higher-priced homes."

Dow Jones Newswire. "As the housing slump drags on, some builders have a deal for potential buyers: Sign a contract, and if the price of comparable homes drops before closing, you get the lower price."

"It is a strategy shift for the ailing industry, which initially resisted price cuts as the market softened. Builders first offered freebies like granite countertops. Then, in September, Hovnanian Enterprises Inc. held a national 'Deal of the Century' bonanza offering discounts into the six figures, a move other builders quickly copied, even though it can drag down a neighborhood's value and incense earlier buyers."

"Dramatic price reductions, however, haven't been enough."

"There is also risk for builders and no assurances this will work: Last year, behemoth Lennar Corp. tested it in Florida, one of the states hardest hit by the downturn, but stopped."

"Even after trimmed price tags, buyers could still decide to walk away, keeping cancellation rates elevated. And if prices decline during construction, companies could see gross margins, which hit 25% during the boom and have plummeted to razor-thin levels, further stressed."

"Jeff Gibbs feels 'peace of mind' about the value of his $245,000 home being built, replete with crown molding and hardwood floors, that he contracted to buy near Phoenix. 'If the market keeps on going down before I buy, I'm going to get the lower price and that means a lot,' said the 28-year-old sales and marketing rep. 'It's almost like they're thanking me for buying when I did.'"

The Daily Herald. "Sirva Inc., the moving company doing business as Allied Van Lines Inc. and North American Van Lines Inc., filed a pre-negotiated bankruptcy for itself and 58 affiliates, citing the slowing housing market."

"'Customers are simply not moving as much,' Douglas Gathany, senior VP, said in court documents. He added consumers are delaying moves because they can't sell their homes."

"As part of its services to corporate clients, Sirva helps manage employee relocation programs, including helping the customer's employees sell their houses, move and buy new homes, often buying the home for later sale. Under some of the contracts which work on a fixed fee, Sirva agrees to buy the home if it isn't sold within a pre-determined period. It also assumes costs and losses on a resale of the home."

"Their 'home inventory is growing,' Gathany said. 'The homes stay in inventory longer, and many homes must be sold for a loss.'"

"Barry Diller's IAC/InterActiveCorp reported Wednesday that it lost $369.9 million in its fourth quarter. Revenue at online mortgage referral unit LendingTree fell by 55 percent to $52.1 million as it dealt with a falling housing market. That unit swung to an operating loss of $508.1 million."

The Budapest Business Journal. "South Korean local banks lost $563 million as of the end of December after investing in US subprime mortgage-related instruments, said the Financial Supervisory Service."

"Seven local banks, including Woori Bank, the country's No. 2 lender, invested $682.5 million in US collateralized debt obligations (CDOs) derived from subprime mortgages and lost 83% of their total CDO investments, the financial watchdog said."

From Bloomberg. "U.S. Central Federal Credit Union, the non-profit company that invests on behalf of 8,400 local lenders, lost its AAA rating from Standard & Poor's after reporting a $760 million drop in the value of subprime-infected securities."

"The ratings service may downgrade U.S. Central again if the investments deteriorate further, analyst Robert Hoban said in the statement."

"'With the housing market weakening to levels not seen since the early 1990s down-cycle, we expect U.S. Central's large portfolio of mortgage-related securities to further decline in value,' Hoban said. 'Earnings and capital measures already are under pressure.'"

"The amount represented almost 2 percent of the Lenexa, Kansas-based firm's total assets. The $18 billion writedown Citigroup Inc. reported last month amounted to less than 1 percent of the largest U.S. lender's assets."

"'I've never seen a market disruption or interruption like this' during more than two decades working at credit unions and commercial banks, Executive VP Dave Dickens said. 'Fixed-income markets are in a state of disarray.'"

"The fourth-quarter writedown reduced U.S. Central's 'net economic value' by about half, according to financial statements released last week. Of U.S. Central's $45.1 billion of assets, about 45 percent are 'non-agency' mortgage-backed securities, meaning they don't carry a guarantee from a federal-government-sponsored entity such as Fannie Mae or Freddie Mac."

"Less than 2 percent of total assets are in securities backed by subprime mortgages, Dickens said."

From Reuters. "The CEO of accounting firm PricewaterhouseCoopers expects more non-financial U.S. companies to report write-downs linked to the credit crisis, showing the problem has the potential to infect a wide swath of corporate America."

"'It's not just in banks,' CEO Samuel DiPiazza told reporters late on Tuesday. 'These securities sit in cash equivalent accounts of industrials; they sit in investment portfolios of pensions.'"

"'We are having to deal with this with thousands of companies, not just a handful of big banks,' he said, and added that a 'first wave' of write-downs was likely in the current audit cycle this quarter."

"Last month Bristol-Myers Squibb Co became among the first companies outside the financial sector to disclose its exposure to the world-wide credit crisis. Over the last few months, other non-financial companies such as networking-equipment maker Ciena Corp and software company Lawson Software Inc have also reported write-downs related to the credit crunch and the housing sector meltdown."

"DiPiazza declined to comment on how big he thought such write-downs would be, saying it varies with companies."

"'I will not underestimate the challenge we have working through a lot of complex securities and getting them valued,' he said. 'We have to ask the question, what's under the surface.'"

"The U.S. Securities and Exchange Commission's review of the credit rating agencies is in process and agency staff may make some recommendations on how to improve disclosure and conflicts of interest as early as June or July, a senior SEC official said on Tuesday."

"Last year, the investor protection agency gained oversight of the credit rating agencies such as Moody's Corp, Standard & Poor's and Fitch, which have been blasted for not responding quickly enough to the deteriorating conditions in the subprime mortgage market."

"Rating firms have been accused of conducting weak analyses and granting higher ratings because they are paid by the companies or issuers whose securities they rate. Critics also blame them for failing to highlight risks secured by pools of mortgages, including subprime mortgages for U.S. borrowers with tainted credit."

"FDIC Chairman Sheila Bair, who spoke at the summit earlier in the day, said said the industry needs greater transparency about the quality of the assets ultimately underlying the products they're rating."

"'They don't even look at the underlying quality of the assets,' Bair said at the Reuters Summit."

"A global forum of financial watchdogs will call for greater disclosure on securitised products when Group of Seven finance officials meet on Saturday in Tokyo, Japan's Nikkei daily reported."

"The Financial Stability Forum, a group of central bankers and regulators from 12 industrialised nations, will present the G7 officials with an interim report on the causes of the global market turmoil and ways to prevent such problems in future."

"To prevent further turmoil, the forum's report calls for rating agencies to provide investors with more information to make their rating methods more transparent, the Nikkei daily said. It will also recommend that these institutions build up enough convertible assets to prepare for liquidity risks and that authorities tighten controls on risk assets, the Nikkei said."

"Subprime mortgages were the driving force behind a boom in structured finance as banks bundled risky U.S. mortgage assets into complex instruments and sold them to investors worldwide."

"It also asks authorities to examine whether current practises that rely greatly on rating agencies is weakening market discipline, the Nikkei said."

From MarketWatch. "Goldman Sachs Chief Financial Officer David Viniar said Wednesday that the firm wants to be a buyer of distressed mortgage debt. 'We will be a buyer if there is a seller, at a reasonable price,' he said."

"He added that among subprime mortgage securities, he reckons they are likely near fair value, because, 'you can't go below zero.'"

"U.S. credit markets are trading as if the economy is in a recession because investors' 'fear has overwhelmed greed,' Goldman Sachs CFO David Viniar said today. 'Credit markets are trading like we're in the middle of the worst recession we've seen in a very, very long time,' Viniar said at an investor conference."

"Gregory Fleming, Merrill Lynch & Co.'s chief operating officer, said at the same conference that while 'there's a lot of liquidity,' the climate for deals had deteriorated, and many investors are waiting to make sure the worst is over."

"'There clearly is a lot of nervousness and indeed even fear out there,' Fleming said."

"Viniar also said he expects to see a plan devised that will help the monoline bond insurers, which are facing potential rating downgrades. Insurers including MBIA Inc., Ambac Financial Group Inc. and Financial Guaranty Insurance Co. are at risk of losing their AAA ratings because mortgage-backed securities they've insured have declined in value."

"New York State Insurance Superintendent Eric Dinallo told a meeting of Wall Street banks and brokerages that they 'created this mess,' making necessary a plan to rescue bond insurers, the Wall Street Journal reported today, citing people familiar with the matter."

"'It is likely that you will see some solutions to what's going on with the monolines,' Viniar said."

"The senior Republican on the Senate Finance Committee called on Tuesday for more public disclosure and transparency in the mortgage market."

"Sen. Charles Grassley said more transparency, such as the disclosures mandated by the Securities and Exchange Commission, is needed in the troubled market for mortgage- backed securities."

"'Included in transparency is some sort of reporting so that somebody in government knows what's going on. It's kind of along the lines of what the SEC's supposed to be doing,' Grassley said at the Reuters Regulation Summit in Washington."

"'If there's criminal activity -- and the FBI's investigating it -- heads ought to roll or it's going to be repeated,' Grassley said."

"In addition to more transparency and disclosure, Grassley called for more accountability along the debt securitization chain, starting with originators of mortgages."

"'People that originate this stuff ought to have skin in the game. They don't have any skin in it. You negotiate it and you get your money and you can run for the woods,' he said."

"'And then the financial institution. I think the best way to make sure this doesn't happen again, when you pass these on to somebody else, you ought to have some little bit of risk -- one percent, five percent, I don't know what the magic percent is ... You just can't dump your problems on somebody else,' he added."

"There ought to be some relationship between that financial institution and these people that are negotiating these things,' Grassley said, adding that originators need to pay more attention to the income and ability to repay of borrowers."

"'We've got evidence that they gave loans to people who didn't have jobs or even bothered to look to see if they did,' he said."