Some housing bubble news from Wall Street and Washington. MarketWatch, "Bank of America Corp.'s first-quarter profit fell 77% as credit-loss provisions jumped $4.78 billion, driven by weakness in home-equity loans as well as credit extended to small businesses and home builders, the company said Monday. In addition, the bank said it had increased its loan-loss provisions to $14.89 billion as of March 31, compared with $8.73 billion a year earlier -- a function of tightening credit markets and a sluggish housing market."

"'Credit quality deteriorated in several areas, most notably in regions that have experienced the most significant home price declines, which includes the former high-flying areas such as California, Arizona and Florida,' said analyst Walter O'Haire."

From Bloomberg. "National City Corp., Ohio's biggest bank and subprime lender, said today in a statement the net loss for the first quarter was $171 million. National City posted three consecutive quarterly losses as homebuyers struggle to repay loans."

"National City lost about 83 percent of its market value in the past year. The lender will raise $6.37 billion selling convertible securities. 'Shareholders continue to get penalized,' said analyst Gerard Cassidy. 'It's another major company going to the capital markets to enable them to survive in this incredibly deflationary environment.'"

From Reuters. "Swiss bank UBS AG released on Monday its 'Shareholder Report on UBS Writedowns', a document that might be better named 'How Not to Run a Bank.' The report is part of a forensic exercise ordered by Swiss banking regulator EBK in the wake of UBS' $37 billion in writedowns on the subprime crisis -- the biggest by any bank."

"Analysts said some of the most disturbing passages relate to UBS' apparent belief then that it was immune to the same problems that were facing the broader market."

"'The various parties involved with the portfolio were aware of the content of the portfolio and the deterioration in the subprime markets generally. However, those persons seem to have believed that there would not be an impact on the highly rated ABS in the portfolio,' the report said."

"The report also offers a clear warning sign to regulators wondering whether their attempts to forestall a systemic collapse through massive liquidity injections would pose a moral hazard, or entice others into more risk-taking."

"UBS admits as much, saying specifically that its traders abandoned caution, knowing that they could always exchange their assets against government bonds as collateral at a central bank."

"'Further comfort was taken from the continued acceptance of the respective assets as eligible collateral with the relevant Central Banks,' UBS says in the report."

The Observer. "British expats desperate to return home are having problems selling their Spanish homes due to plummeting house prices, the strong euro and potential buyers being put off by press reports of illegal building practices."

"'We're amazed at how difficult it's been to sell,' says Maureen Renno of her four-bed apartment at Calahonda, near Marbella on the Costa del Sol. 'We thought it would go really quickly, but it's been on the market for over two years.'"

"Maureen and her husband, both retirees, sold their home in Horsham, West Sussex and moved to Spain four years ago, buying their property outright for €325,000 (£262,000). Maureen, however, found it hard to settle in Spain and began pining for home and her family. After two years, the couple decided to put their flat on the market and move back to the UK."

"They were shocked to discover that, instead of appreciating in value, their apartment was worth, at best, only what they had paid for it two years earlier. The glut of new-builds in their area was stifling the sales of older properties, as investors were seeking to buy off-plan."

"After several months without any interest, the Rennos dropped their price to €299,000 and moved back home. Now living in rented accommodation costing £900 a month, the couple are running out of savings. 'We need the money from the Spanish property to be able to buy in the UK,' explains Maureen. 'Without it we're stuck.'"

"Maxine Crooknorth, from East Sussex, decided to move to the Costa del Sol with her six-year-old son in 2005 in search of a fresh start. She bought her two-bedroom, golf course apartment for €247,000, paying half of the purchase price upfront. She believed she would be able to comfortably afford the remaining mortgage and that the property would be a great investment."

"'It seemed like a good idea to buy then,' she says. 'Everyone was saying how good Spain was, how cheap the lifestyle was and that property prices would go up. In hindsight, I bought at totally the wrong time.'"

"Within a year of moving into her new home, Crooknorth discovered that, as a single mother, she was not able to find work as easily as she'd thought. The cost of living was also higher than expected, and within months she was in financial difficulty. She struggled on until her only option was to sell her home."

"Nine months ago she put the apartment on the market for €265,000 based on the valuation she was given, but has since had to drop the price to €220,000."

"'I'm finding it quite a struggle,' she says. 'But I can't really drop the price any more because all my equity is tied up in it and it's a lot of money to lose. I can't rent it because the payments wouldn't cover the mortgage, but if I don't sell soon I'll be facing repossession.'"

"'There is a lot of property for sale right now,' she says. 'Lots of people are desperate and there are some real bargains.'"

The Washington Post. "If you thought buying a new home was expensive, wait until you see how much it costs you to back out of the deal. With appraised values coming in below the contract price, buyers have to come up with more cash to follow through on such a deal. Sometimes walking away from a purchase is the least painful, most financially prudent option."

"As you might imagine, builders don't relinquish that money gladly. Builders typically ask for 10 percent of the contract price as a deposit, said Harvey S. Jacobs, a Rockville real estate lawyer. 'If you can get away with paying less, great,' he said. 'But they ask for 10 percent.'"

"In addition to the cash deposit, builders frequently ask buyers to sign a promissory note for an equal amount of money, Jacobs said. If buyers are willing to forfeit $50,000 to walk away from a $500,000 home sale, maybe being on the hook for $100,000 would keep them in the deal. 'I'm definitely seeing more letters saying, 'We're going to enforce your promissory note if you don't close,' Jacobs said.'"

"What's more worrisome, Jacobs said, is that many people don't even realize they have signed such a note, just one page among the many included in a sales contract."

The Arizona Republic. "Instead of mailing in their monthly mortgage payment, a growing number of homeowners are sending lenders their keys. The growing trend, called 'jingle mail,' is pushing up foreclosures and alarming market watchers, particularly in metropolitan Phoenix, where home prices have dropped 18 percent in the past year."

"Foreclosures across metropolitan Phoenix climbed to a record 2,365 in March, according to Information Market. That is more than quadruple the number from a year ago."

"Joan Shaffer is turning in the keys of the north Phoenix Tatum Ranch home she bought with her daughter in late 2005. They put nothing down on the home, took out a loan that let them pay less than they owed each month and now their loan is $200,000 more than the house is worth."

"'We paid $585,000. It was the peak of the market, but no one told us,' said Shaffer, a real-estate agent from Colorado. 'We would probably have to spend the next 20 years trying to get right on the mortgage. That's crazy.'"

"'Even if someone put 5 to 10 percent down but bought in the Valley during '05 or '06, they are likely upside down now,' said Brett Barry of the north Phoenix office of Realty Executives. 'I don't advise people to walk away, but how do you convince someone to keep paying when they owe so much more than their home is worth? They can't sell, and their lender isn't going to forgive $100,000 in principal. It's not good.'"

"Investors started the walk-away trend, but it has spread to the typical homeowner. Housing analyst RL Brown said he is hearing about young families who bought during the peak and are now walking away from houses as the interest rates on their loans reset and payments increase."

"'Instead of calling it a foreclosure, these couples are saying, 'We're giving it back to the bank,' and then moving a couple of blocks away and renting a home for half their mortgage payment,' he said. 'These people are finding it easier to walk away.'"

The Star Tribune from Minnesota. "In the rush to find blame for the nation's current housing crisis, the easiest targets have been the lenders and mortgage brokers who peddled predatory loans. But across the country, from the desert suburbs of Las Vegas to the treeless subdivisions of Wright County, many homeowners face a predicament of their own making."

"Now, with home prices falling and mortgage payments rising, panic has set in. Investors are dumping houses on the market before prices collapse further, or simply turning the keys back to the lender. That, in turn, is dragging down values for even longtime homeowners, wiping out the equity they'd built up over the years."

"Officials estimate that up to half of all houses that have gone into foreclosure during the past year are owned by investors. 'You had people buying houses here that they have never even seen,' said Dean Zachman, a sales agent in St. Michael. 'They took bets that, in hindsight, seem reckless.'"

"Bruce McAlpin, a real estate agent in Monticello, said he was asked several months ago by a lender to evaluate a house in the early stages of foreclosure, in a new housing development called Norin Landing in Otsego. He estimates the house is worth $500,000, though an investor bought it in 2006 for $1.375 million and never lived in it."

"'I'm still looking for the gold chandelier, but it's not there,' he said."

"Many of these investors are hardly the struggling home buyers portrayed as victims of the nation's foreclosure crisis. 'Once regular people stopped buying houses, builders had to create their own market,' McAlpin said. 'They preyed on people who weren't savvy real estate investors.'"

"Norm Imholte, a truck driver from Freeport, said a builder paid him $50,000 for agreeing to buy a $425,000 house in St. Michael. The builder told him the house would be sold within 30 days and Imholte wouldn't have to worry about making a payment."

"Imholte bought a new truck with the cash, but the house never sold and has since slipped into foreclosure. He recently got a call from a state Department of Commerce official investigating mortgage fraud. 'I never had any business owning a $425,000 house in Wright County,' he said."

"Other investors are clinging to their houses in the hope that the Wright County real estate market will bounce back to its pre-2007 peak. 'I can't sell these now,' said Michael Morland, who bought two houses in separate subdivisions in Otsego. 'But if I can't get rid of these for a profit in five years, then I'm in trouble.'"

"For Bradley and Sarah Collin, buying real estate in Wright County seemed like a ticket to a better life. The couple and their three children, were living in a crowded trailer park in Blaine, when Bradley saw a newspaper advertisement touting real estate as the next quick way to make money."

"With no money down, they could buy properties in a fast-growing new subdivision in Otsego known as Otsego Preserve. They would get $5,000 in upfront cash for each house they purchased."

"The Collins were also told that home values in Wright County were appreciating at 8 percent a year, much faster than the national average. At that rate, the Collins could make $24,000 a year for every $300,0000 house they bought in the county. They were told that rental income would cover their mortgage payments until the houses were sold."

"The couple purchased four houses -- each for about $300,000 -- hoping to quadruple their profits. The Collins received a $5,000 check after each closing. The cash payments were not disclosed on the mortgage statements sent to the bank, which Collin says he has since learned is illegal."

"But the houses were rented for only eight months, and the income was never enough to cover the mortgages, Collin said. The couple, out of the trailer park and in an Andover rental, stopped making payments on the houses a year ago, and now owe more than $120,000 in back payments to the banks."

"Creditors hound the Collins at all hours of the day. In a single day recently, the Collins received 175 telephone calls from banks and collection agencies."

"'They ask you, 'Well, do you have any family members that you can borrow from? Do you have assets like cars you can sell? What kind of TV do you have?' he said. 'It's not like I have a Lamborghini parked in the driveway that I can just sell and make everything go away.'"

"On a recent weekday evening, Collin visited his foreclosed houses, which are now listed for $160,000 to $170,000. The house had recently been vacated by a family that had 'trashed the place,' Collin said. 'There was dog piss. There was rotten food. The smell was unbearable.'"

"Collin says it will take years for him to restore his credit record to the point where he can buy a house. And the guilt of not paying his bills could linger longer still."

"'All these mortgage companies are going down because of people like me who don't pay their mortgages,' he said. 'I'm partly responsible for that.'"