Some housing bubble news from Wall Street and Washington. MarketWatch, "The U.S. housing market weakened slightly in March, as resales of U.S. homes fell, inventories climbed, and prices continued to decline, the National Association of Realtors reported Tuesday. Resales have sunk 19.3% in the past year and are down 33% from the peak in 2005. The median sales price fell 7.7% in the past year to $207,000, the second-largest price decline recorded since 1999."

"Existing home sales are 'stable yet soft,' said Lawrence Yun, chief economist for the real estate agents' trade group."

"Others said they saw no sign of a bottom in housing. 'Inventories should be going down,' said Dan Alpert, a managing director of a fund that buys distressed mortgages."

From Reuters. "The inventory of homes for sale swelled by 40,000 to 4.06 million homes, or a 9.9 months' supply at the current sales pace from 9.6 months in February."

"Of the homes for sale, 18 percent have negative equity and so are either in foreclosure proceedings or headed for a 'short sale' that will see the lender write off some of the original loan amount. 'This has been a frustration of our members,' said Yun. 'Lenders have been dragging their feet (in approving short sales).'"

"Regionally, existing-home sales in the Northeast are 18.8 percent below March 2007. Existing-home sales in the West are 22.3 percent below a year ago. In the South, existing-home sales are 20.0 percent below March 2007. Existing-home sales in the Midwest are 15.9 percent below a year ago."

"NAR President Richard F. Gaylord, said there are problems with the implementation of mortgage guidelines. 'It appears there is some over-reaction on the part of some lenders now in requiring higher downpayment percentages than may be necessary,' he said."

The BBC News. "Royal Bank of Scotland, the UK's second-biggest banking group, announced a write-down of £5.9bn before tax, following its exposure to the credit markets."

"RBS said it expects additional hits to the value of assets, including the ABN AMRO wholesale business it bought last year, due to the impact of the U.S. subprime mortgage crisis and subsequent credit crunch."

"The bank, which wrote down assets by 2.4 billion pounds last year, said...it valued below-prime Alt-A mortgages at 50 percent, down from 83 percent."

From Bloomberg. "Two big regional banks in the United States, SunTrust Banks in Atlanta and Fifth Third Bancorp of Cincinnati, said the real estate slump, especially in Florida, had required them to increase reserves for bad debt."

"SunTrust raised its provisions for loan losses 10-fold to $560 million because of expected defaults on mortgages, home-equity credit lines and residential construction, it said. Fifth Third increased its reserve to $544 million from $84 million."

The Street.com. "Todd Appleman never envisioned washing his dishes in the bathtub when he opened a $64,000 home-equity line of credit to renovate his kitchen."

"But just when he was about to advance a first payment to his contractors -- who had just ripped out his cabinets and appliances -- Appleman says his lender, Bank of America, froze the line without notice to him."

"'People don't take out a line of equity with the intention of not ever using it. And wouldn't it be courteous to give your customer a call to tell me about this?' he says."

"Manda Hunt of Atlanta says an exemplary payment and credit history didn't influence her lender's decision. Hunt opened a home-equity line when she purchased a one-bedroom condominium in Atlanta for $173,000 in 2002."

"A recent letter she received from Countrywide...explained that she could no longer draw from her home-equity line due to declining real estate values, she says. 'I was freaking out,' says Hunt. 'I wasn't planning on accessing [the line] but I don't want to hear that I can't.'"

"Countrywide now values Hunt's condominium in the mid-$150,000 range -- nearly $20,000 under her purchase price, she says."

The Associated Press. "Yale University economist Robert Shiller, pioneer of the widely watched Standard & Poor's/Case-Shiller home price index, said there's a good chance housing prices will fall further than the 30 percent drop in the historic depression of the 1930s. Home prices nationwide already have dropped 15 percent since their peak in 2006, he said."

"'I think there is a scenario that they could be down substantially more,' Shiller said during a speech at the New Haven Lawn Club."

"Home prices rose about 85 percent from 1997 to 2006 adjusted for inflation, the biggest national housing boom in U.S. history, Shiller said. 'Basically we're in uncharted territory,' Shiller said. 'It seems we have developed a speculative culture about housing that never existed on a national basis before.'"

"Many people became convinced that housing prices would increase 10 percent annually, a notion Shiller called crazy."

"Shiller, who said it's difficult to forecast prices, endorsed legislation proposed by Sen. Chris Dodd, D-Conn., and Rep. Barney Frank, D-Mass., that would allow the Federal Housing Administration to back as much as $300 billion in mortgages for struggling homeowners."

From CNN Money. "There are calls for the government to help homeowners at risk of foreclosure. But some experts think a mortgage rescue could cause more problems than it solves."

"Some think the Dodd-Frank plan will at least slow the decline in home prices. Problem is, that could ultimately be bad news for the economy too. That's because some think that, as painful as it may be, the best way to fix the housing crisis is for the free market to run its course. After all, lower home prices might actually help stimulate demand again."

"'What the market is in the process of doing is bringing home prices back to where they should be by any traditional measure,' said Barry Ritholtz, CEO of equity research Fusion IQ. 'If home prices don't go down, it means newlyweds can't go out and find a home they can afford.'"

"'We must work to limit the impact of the housing downturn on the real economy without impeding the completion of the necessary housing correction,' said Treasury Secretary Henry Paulson in a speech last month."

"William Wheaton, a professor with the Massachusetts Institute of Technology's Center for Real Estate, argues many of the homeowners now facing foreclosure could be better off renting the same home at current market prices, rather than trying to refinance the mortgage."

"'It's very popular to say you're in favor of home ownership, even if it doesn't make any economic sense,' he said."

"Robert Shiller, a Yale economist who has long argued there was a bubble in home prices, thinks the plan will do little to stop the slide in housing prices."

"Shiller adds that when compared to measures such as rents and household income, housing prices are still out of equilibrium. 'I'm not sure we can achieve continuing high home prices,' he said."

"If he's right, more borrowers may find themselves owing more than their house is worth, which could add to the number of foreclosures and homes on the market."

The Herald Tribune from Florida. "If no-money-down was the real estate password for the first half of the 2000s, 'jingle-mail' might be the word for rest of it."

"For 2007, 142 properties out of 6,188 sales were officially tagged as being distressed in the Sarasota MLS for a rate of 2.3 percent. But the number of homes swelled to 8.1 percent in January, 8.7 percent in February and 10 percent last month, says Jose Lopez, a distressed-property specialist who is tracking the phenomenon."

"Even the incomplete month of April already is higher than that for all of 2007."

"'It keeps growing and growing and growing,' Lopez said. 'I wouldn't be surprised if we end up this year at six to seven times the amount of these type of properties that were sold last year.'"

"Adjustable-rate mortgages now resetting and many times pushing up monthly mortgage costs by 35 percent are 'the thing that is going to continue to spike it up,' said Budge Huskey."

"'As housing values are going up, people are more apt to do everything they can to hold onto their homes,' said Huskey, whose company runs what is probably the largest management division in the nation for bank-owned properties. 'There is a behavioral element, too, that in a declining environment, people are less likely to save their property. A lot of people think, 'Well, there's nothing I can do.'"

"Lopez is not courting banks for their listings, preferring instead to work with buyers, finding the best deals among homes owned by banks or requiring bank approval because they are worth less than the loan. He then works at making them even better deals by making low-ball offers."

"'There are some agents out there saying the bank will forgive up to 10 percent, that any offer has to be 90 percent of what is owed,' Lopez said. 'That is absolutely ridiculous. They will do 20 percent with no problem, and I have seen as high as 50 percent.'"

The Star Tribune from Minnesota. "The reckoning inside the Colvins' four-year-old home is playing out at kitchen tables and corporate boardrooms across Minnesota -- and the world."

"Jon Colvin informed CitiFinancial that he would be unable to make his March mortgage payment, and would probably miss April's, too. He hoped the news would finally scare the bank into renegotiating a mortgage he can't afford for a house he can't sell -- and now wishes he had never bought."

"'It's not something I feel proud doing,' Colvin said of missing the payments. 'But how else am I going to get the bank's attention?'"

"By the late 1990s, with the Twin Cities suburbs filling fast, Wright County was a bargain for developers. In sleepy rural communities like St. Michael, land could be had for less than $10,000 an acre, just a quarter of prices closer to the Twin Cities."

"In Otsego, almost 2,200 units were built during the same period. The county's average sale price jumped from $180,102 in 2001 to $234,009 in 2007, an increase of 30 percent. In Albertville, the gains were even sharper: 43 percent."

"'In 2005, my dog could have sold real estate in Wright County,' said Dan Frie, a sales agent in Monticello, who has been in the business nearly 30 years. 'A lot of people thought this was the next big growth market, and they wanted to be part of it.'"

"While Frie blames fraud for exacerbating the problem, many of the mortgages that are in default are held by people who believed -- as many did and as the real estate community told them -- that real estate doesn't lose its value."

"Newly married in 2005, James and Angela O'Hara, 25, fell in love with a tidy two-story townhouse in St. Michael. A real estate agent urged the couple to buy early, noting that other buyers would bid up prices by 5 to 10 percent once the rest of the project became reality."

"'They sold the vision as much as the house,' James said. 'They said it would be this bustling neighborhood with all these attractions just a block away. We never imagined it would lose value.'"

"Instead of living in a bustling urban village, the O'Haras look out on a field of weeds and townhouses with 'Bank Owned' signs posted on their front doors. Several of the townhouses are clad in Tyvek HomeWrap, their brick facades still unfinished."

"The O'Haras need to move out of their townhouse by next summer, when James, a staff sergeant in the Marine Corps, reports for officer's training in Virginia. But the couple fear they won't be able to sell the unit for enough to repay the $190,000 mortgage. 'It's become a huge albatross around our neck,' James said."

"'A lot of the prices that people were paying for property in Wright County had no basis in reality,' said George Schmidt, a real estate agent in Anoka. 'They were destined for foreclosure.'"

"Jeffrey Schoenwetter, CEO of JMS Homes in Eden Prairie and one of the investors in Martin Farms, said 400 houses didn't seem excessive when the project was hatched in 2004."

"'When you have 10 builders come to you and say, we want to buy 10 lots a year, and then Mr. Builder says, 'I have five friends that want to come, too, could we have 100 lots?' Then I said, 'OK, I'll develop 100 lots,' he said."

"Laurie Karnes, a real estate broker who specializes in selling undeveloped land in the Twin Cities, blames today's problems on greed and a failure to acknowledge that the good times wouldn't last forever. 'Logic would have told you, why would you build there?' Karnes said of some of the county's overdeveloped communities. 'But logic wasn't fueling this craziness.'"

The Tennessean. "About 47,000 loans, or 42 percent of all the adjustable- rate mortgages in Tennessee, were subprime at the end of last year, according to the Mortgage Bankers Association. Housing counselors in the Nashville area say they're seeing ARMs for subprime borrowers resetting at up to 13 percent interest."

"Emerging from bankruptcy three years ago, Marcus Neal seemed an unlikely candidate for a home loan. But that didn't stop his lender. With no money down, Neal was able to buy his first home, a cozy two-bedroom townhouse in La Vergne, for $89,000 just six months after walking out of U.S. Bankruptcy Court."

"Neal said a credit counselor whose advice he sought after his bankruptcy steered him to a local real estate agent and said it made sense to buy a home. Neal said he had been living in an apartment complex with a crime problem, and home ownership seemed like a sensible way out."

"The builder of his new townhome, Ole South Properties, one of the largest builders in Middle Tennessee, lent him $8,994 so he didn't have to come up with a down payment."

"Washington Mutual Inc., which financed 90 percent of the purchase price, gave Neal a 9.5 percent interest rate on an adjustable-rate mortgage that would reset after two years, according to the mortgage documents."

"Neal said he is now several months behind on his mortgage payment after he lost his job as a boiler room operator. Plus, his mortgage reset last year, adding another $100 to his loan payment every month."

"'Most subprime loans were done with the thinking that, within the next two years, it would be refinanced into a prime product,' said Keith Payne, a loan officer at Freeman Webb Mortgage."

"Payne said he didn't do many of those loans, telling people to wait a few years and improve their credit instead. 'But a lot of people were not thinking about … two years down the road. It was one of those things people thought would go on forever, and now they're finding out, nothing goes on forever,' he said."