Some housing bubble news from Wall Street and Washington. Bloomberg, "Northern Rock Plc, lost 243.5 million pounds ($483.4 million) in the 12 months ended Dec. 31, the company said in its annual report published today. 'The 2007 results reflect the impact of deteriorating market conditions and the effects of significant liquidity and funding constraints on the company,' the Newcastle, England-based bank said. The company doesn't plan to erase losses until 2011."

"'If the mortgage market gets harder and the housing market gets softer, there is no question it will become more challenging for us,' said CEO Ron Sandler. 'We anticipate loan loss provisions will increase over time.'"

"The government nationalized Northern Rock, the first U.K. bank to suffer a run on its deposits in 140 years, in February after a five-month search for a private buyer failed. The bank owes nearly 24 billion pounds to the Bank of England, down from 26.9 billion pounds at the end of 2007, and said it plans to repay the emergency aid in 2010."

"Sandler, who took over as chairman after the bank was nationalized, plans to sell half of Northern Rock's assets and cut about a third of its workforce to repay the government's loans and return the bank to private ownership."

The Evening Standard. "London house prices are no higher in real terms than they were a year ago, new figures show. Chartered surveyor Anna Jolly, 29, put her three-bedroom flat in Battersea Square on the market for £400,000. A few weeks later she received an offer at £25,000 below the asking price."

"She said: 'I remember it clearly because it was the day that Northern Rock crashed. At the time I thought I could do better so I hung on for a few more weeks. We had a lot of viewings but no more offers, so I eventually accepted the original offer. I realised the way the market was going and realised it wasn't bad under the circumstances.'"

"In Sneath Avenue, Golders Green, the owner of one four-bedroom house has had to cut her asking price by a fifth in less than three months. She put the Thirties property on the market for £750,000. A month later she reduced it to £729,000 and three weeks later to £699,000."

"Today, estate agency Moreland cut another £100,000 off. Edward Gilbert of Moreland said: 'It's gone from being ridiculously overpriced to being very, very competitive. We expect to sell it within days.'"

"Ed Stansfield, property analyst at the Capital Economics consultancy, said: 'Hopes that the housing market is experiencing little more than a short-term wobble look increasingly forlorn.'"

"Howard Archer of analysts Global Insight added: 'There are fewer mortgages available and they are more expensive. "We expect house prices to fall by at least five per cent both this year and in 2009. If the economy suffers extended weak growth, this will trigger a sharper fall in prices.'"

"'If both sellers and buyers start expecting prices to fall sharply, there could be a flood of sellers putting their houses on to the market,' he said."

The Associated Press. "The Bush administration Monday proposed the most far-ranging overhaul of the financial regulatory system since the stock market crash of 1929 and the ensuing Great Depression."

"The plan would change how the government regulates thousands of businesses from the nation's biggest banks and investment houses down to the local insurance agent and mortgage broker."

"It would ask Congress to establish a federal Mortgage Origination Commission to set recommended minimum licensing standards for mortgage brokers, many of whom now operate outside of federal regulation. Treasury Secretary Henry Paulson rejected charges that it was lax regulation of mortgage brokers and the financial industry that had led to the current problems."

"'I do not believe it is fair or accurate to blame our regulatory structure for the current market turmoil,' he said. 'I am not suggesting that more regulation is the answer or even that more effective regulation can prevent the periods of financial market stress that seem to occur every five to 10 years.'"

"Senate Banking Committee Chairman Christopher Dodd said in an appearance on CBS' 'Early Show' that it was not a failure of the regulatory scheme but 'a failure of leadership' that led to the current crisis."

National Mortgage News. "For three months now a source familiar with the situation has been telling us that Carrington Capital Management -- which bought the servicing platform of now-defunct subprime giant New Century Financial Corp. -- has been having (shall we say) some financial challenges."

"This past week it was reported that Carrington, the brain child of former Salomon Brothers executive Bruce Rose, is trying to persuade investors to lend it $200 million to replace its current bank lines. The obvious question is this: Have his current lenders become 'risk adverse'?"

"Readers (have) been kind enough to share their thoughts on a variety of topics affecting the mortgage industry. 'Over the past 12 to 18 months the mortgage brokers of this country have been slandered, defamed and egregiously designated the scapegoats of 'subprime-gate.' They have lost their jobs, their businesses and their industry as a result of selling exotic mortgages created and distributed by big banks and Wall Street.'"

"'The banks created, packaged and sold their subprime products through far reaching and sophisticated sales channels. The facts are that these people stole the broker industry. They created the Ameriquest's of the world and they encouraged everyone to sell their programs. If you didn't sell it, the company down the street did...The fallout from this mess will not only cripple the broker industry and its people, it will hurt borrowers more than one can imagine.' -- Joe Adamaitis, Direct Mortgage."

The Denver Post. "When Torrence James was finished serving a federal prison sentence for dealing cocaine in 2004, he took one of the few white-collar jobs then still available to convicted felons. He became a mortgage broker."

"Last week, Chief U.S. District Judge Edward W. Nottingham sentenced James to 12 years in prison for mortgage fraud. Many of the luxury properties that James and six other defendants skimmed became party pads as they fell into foreclosure, devastating local property values."

"One of the companies James and his crew defrauded was New Century Financial Corp. of Irvine, Calif., which is now under federal investigation for fraud itself."

"New Century is in bankruptcy after paying its executives millions in bonuses and stock options. Its three founders made more than $40 million selling stock between 2004 and 2006 as the company apparently made loans to anyone with a pulse. When the company is liquidated, its shareholders will receive a penny to 25 cents on the dollar."

"New Century had a 'brazen obsession' with making subprime loans, turning 'a blind eye' to a 'ticking time bomb,' according to an independent report released last week that was commissioned by the Justice Department."

"New Century wrote $357 million worth of mortgages in 1995, the year it was founded. In 2006 it wrote $60 billion. How did it grow so fast? Liar loans."

"The 580-page report from examiner Michael Missal, which was more than five months in the making, concludes that New Century's auditor, KPMG, failed to exercise due care in reviewing the books, leading to misstated financial results."

"KPMG has said it 'strongly disagrees' with the report's findings."

"'It's an Arthur Andersen re-do,' said Lynn Turner, the former chief accountant for the U.S. Securities and Exchange Commission, who now sits on the U.S. Treasury's committee on the auditing profession. 'We're right back where we were in pre-Enron days.'"

"'Some things blow up occasionally,' said John Bazley, a professor at the University of Denver's Daniels College of Business. 'People make mistakes.' In the case of New Century, KPMG may have had to constantly re-value complex securities stuffed into Byzantine portfolios, Bazley explained."

"'It's a Wall Street issue more than an accountants' issue,' said Bazley. And a very complicated one at that. Meantime, it's a good thing they got that Torrence James guy. What a menace to society he was."

The Boston Globe. "The bellwether spring housing market is around the corner, but the nation's credit crunch means it's more difficult for buyers to obtain mortgages. Timothy Warren Jr., CEO of a Boston real estate and research firm founded by his great grandfather, Willard Warren, answered questions about Massachusetts' market for Boston Globe reporter Kimberly Blanton."

"Q.What do you expect for foreclosures this year? A. The number of foreclosure deeds filed in 2007 was 7,653. The number of petitions, the first stage of the process, was 29,607 - a record. I expect both numbers to continue to climb. And the number of people entering the foreclosure process increased dramatically in the second half of last year...Distressed properties are dictating the whole market in many communities."

"Q. Is the credit crunch on Wall Street making it harder for everyone to get a loan? A. Yes. It's due to tightening loan standards and less liquidity. Lenders don't want to take risks anymore...The number of single-family home sales was down about 10 percent for all of 2007, though the pace accelerated at the end of the year. It wouldn't surprise me if this year it's double that."

"Q. Could government have prevented this crisis?"

"A. In hindsight, the government made a lot of mistakes. Perhaps the Federal Reserve fueled 'irrational exuberance' in real estate prices by keeping interest rates low. The easy money, low interest rates with low documentation requirements, and 100 percent financing just made it too tempting for people to jump in. People assumed prices were going to keep rising and refinancing was going to solve any problem they had of meeting their mortgage payments. It's like playing Monopoly with fake money."

The Vicksburg Post. "For Vicksburgers facing foreclosures, futures appear murky. Most houses up for foreclosure are vacant, regardless of location -- whether their owners lived beside the manicured lawns of the county's most expensive subdivisions or packed tightly within central Vicksburg's oldest neighborhoods."

"Some of them reflect the financial world's 'teaser-rate' mortgage loans, which have fluctuating interest rates depending on financial markets. Those loans usually start out lower and increase over time."

"But local attorney David Sessums said the adjusted ratings are not necessarily the cause of the foreclosures in which he has acted as trustee. Instead, he said, they reflect a downturn in the fortunes of homeowners."

"'Three years ago, you saw a really nice occasion. Young couples were happy about getting a house,' Sessums said, adding details on loan terms are often overlooked -- buried inside 'an inch- to an inch-and-a-half-thick' stack of paperwork when people sign for a house."

"'He who has the gold makes the rules whether they read them or not,' Sessums said."

The Tennessean. "While the housing slowdown has caused many homebuilders to pull back, Centex Corp. has kept building."

"On the edges of popular Middle Tennessee communities — Brentwood, Hendersonville and Franklin — the Dallas-based homebuilder is forging ahead with a strategy that takes aim at the market for homes priced at $250,000 and below, a portion of the local market it views as underserved."

"'We're servicing the family buyer,' said Wes Patterson, the company's division president. 'Our price points start in the 130s ($130,000). … It's difficult to match that price in the places where we're building.'"

"Often ignored during the housing boom, these lower-priced homes could now become a potential life buoy for the struggling construction industry, some believe."

"Two years ago luxury homes priced at $500,000 and above drove Nashville's construction market, as homeowners stretched their finances or cashed in on rising prices to move into fancier abodes."

"Now homebuilders say their best sales — or at least, the smallest declines — have been in moderately priced homes."

"'They have buying power, they're well-funded, and they made some huge decisions competitively,' said MarketGraphics President Edsel Charles."

"Centex's focus toward lower-priced housing in Middle Tennessee is part of a nationwide strategy to shift its focus back to its longtime strength — starter and first-time move-up homes, said Jay McCanless, a housing industry analyst in Nashville. Many other companies are doing the same."

"'You saw a lot of builders who saw prices appreciate and try and stretch themselves a little bit,' McCanless said."

"Several owners who bought into Concord Place during the housing boom have opposed plans to expand their neighborhood. The new section of homes will have layouts similar to their houses, but with prices that have been reduced to reflect the slower housing market. They fear this will undermine the value of their homes."

"'I love my home,' said Christopher James, who bought a four-bedroom, three-bathroom house in Concord Place for $290,000 in September 2006. Now, Centex is advertising similar homes for $220,000."

"'If they start selling for that price, I will be upside down,' he said."

"Patterson said the pricing in the new section reflects smaller lot sizes and a weaker real estate market. 'Pretty much everyone … is facing the same thing,' he said."

"Other companies are expanding with projects at similar price points. Reston, Va.-based NVR Inc., which does business locally as Fox Ridge Homes, plans to start construction soon on communities in Sumner and Rutherford counties where the bulk of the homes will be priced $250,000 and below."

"Atlanta-based Beazer, meanwhile, has communities in Bellevue and Hermitage aimed at lower- and middle-income buyers. Neither firm said it has intentionally taken aim at lower-priced homes, as Centex has done. But, as the economy has soured, both expect those will be a greater part of their sales."

"'It's not any conscious effort on our part, but our sales are generally coming out of that price point,' said David Hughes, Beazer's Nashville division president. 'We're not (speculating), but if we were to, we would definitely (speculate) in that.'"