Some housing bubble news from Wall Street and Washington. AP, "Homebuilder Centex Corp. reported a loss of $911 million in its fiscal fourth quarter, as sales tumbled 37 percent and the company wrote down the value of unsold homes. To revive sales, Centex cut its average selling price 15 percent. The average selling price of a Centex house fell to $267,953 from $315,157 a year ago. Still, home closings declined in every region of the country. CEO Timothy Eller called this 'the most difficult housing market in decades' and said the outlook remained weak."

"The Southeast and Southwest were Centex's worst regions, as home closings fell 47 percent and 40 percent, respectively, from early 2007. It was only slightly less grim in the Northwest, off 18 percent, and Texas, down 21 percent."

"Builders have been struggling to keep up debt payments despite their declining revenue. Centex reported that its net debt-to-capitalization ratio ballooned to 54.6 percent as of March 31, compared with 37.1 percent a year ago."

"It was the fourth quarter in Centex's fiscal year, during which the Dallas-based builder lost $2.66 billion."

From Reuters. "Included in the latest results was a non-cash charge of $362 million related to the lower value of land and inventory it holds, and a write-off of $395 million related to the sale of 8,545 lots for $161 million, an average of $18,841 per lot. Total revenue fell 36 percent to $2.31 billion."

"Housing gross margins fell 10 percentage points from a year earlier, as the company aggressively offered discounts and incentives to sell homes."

"'We ... accelerated home sales in front of impending foreclosures, significantly reduced our unsold inventory and completed a large land sale,' Eller said in a statement."

From Realty Check. "Up until yesterday, the builders’ number one priority appeared to be a tax provision that would allow them to carry back net operating losses (NOLs) to profitable years. Well now the builders are changing their tune, or, so they say."

"Their 'focus,' now, is away from the NOL provision and toward a tax break for home buyers. 'We believe that the tax credit version in the House stimulus package would indeed stimulate the economy much more directly, much more rapidly and much more stronger than the Senate NOL provision,' National Association of Home Builders Chairman Jerry Howard told me yesterday."

"I called some folks in the industry. Some big folks. The word I got...is that they all realize the political pendulum has swung away from the tax break, i.e. the direct builder bailout and toward a more consumer-friendly provision: like the tax break for home buyers."

The NAHB. "The mortgage credit crunch has spilled over into the housing production loan market, threatening to prolong the current housing downturn, the National Association of Home Builders (NAHB) told Congress today."

"'The mortgage credit crunch will continue to be the most significant factor impacting the home building industry into the foreseeable future,' Scott Eckstein, president of the Illinois Home Builders Association, told the House Small Business Subcommittee on Finance and Tax."

"Eckstein said that the credit crunch appears to be actually worsening. 'Tighter mortgage lending terms have made it difficult for home buyers to obtain financing to purchase new homes. Likewise, builders are reporting an adverse shift in terms and availability on loans for land acquisition, land development and home construction (AD&C).'"

"'Defaults on AD&C loans are rising. In this environment, banks are actively reducing exposure levels to home credit,' said Eckstein."

"To broaden sources of AD&C credit, Eckstein called for: Fannie Mae to ramp up activity in its AD&C loan purchase program and for Freddie Mac to create a similar program. Federal Home Loan Banks to improve AD&C liquidity by accepting housing production loans as collateral for the secured advances they make to member institutions."

"The Federal Housing Administration to help increase competition in the AD&C market by insuring the construction portion of these loans in order to attract new originators such as mortgage banking companies. 'As in the case of the end-loan mortgage market, FHA could be a crucial stabilizing force in AD&C lending in turbulent times such as these,' said Eckstein."

"'Overly pessimistic assumptions about future home sales and values will result in an unnecessary extension of the credit crunch and housing recession,' said Eckstein. 'Draconian restrictions on lending or forced reductions in AD&C concentrations will only serve to exacerbate the present crisis and delay, or even prevent, future recovery.'"

The Daily Bulletin. "President Bush on Tuesday acknowledged that the economy is burdened by high energy prices and a slumping real-estate market. Bush unequivocally laid blame on Congress for failing to act decisively in helping homeowners swamped in the subprime doldrums."

"'Last year, I called on Congress to pass legislation that would help address problems in the housing market, ...' Bush said. 'Yet they failed to send a single one of these proposals to my desk. Americans should not have to wait any longer for their elected officials to pass legislation to help more families stay in their homes.'"

"But Congress and the Bush administration's complicity years ago paved the way for today's housing crunch, said David Olson, president of Wholesale Access Mortgage Research and Consulting Inc. of Columbia, Md."

"'That stated 70 percent goal of home ownership has turned out disastrous,' he said. 'The biggest thing Congress can do would be to get more money to the Federal Housing Administration for hiring because that agency is swamped with loans, loans that are liable to blow up two years from now and deepen this thing even further.'"

"A mandate to split the U.S. home loan and home appraisal industries would needlessly damage those sectors and endanger the two largest U.S. sources of mortgage finance, appraisal and lending trade groups said on Wednesday."

"The plan in question calls for Fannie Mae and Freddie Mac only to finance home loans from lenders that have put their appraisers at arm's length."

"The mortgage finance giants agreed to those rules as part of a March deal with New York Attorney General Andrew Cuomo to end an investigation into whether the government-sponsored enterprises (GSEs) had allowed inflated home valuations."

"On Wednesday, the Mortgage Bankers Association (MBA) and a confederation of appraisal groups outlined their opposition to a plan they called burdensome and wrongheaded."

"Cuomo has said mortgage lenders and appraisers were at times too cozy. (He) said in a statement the agreements were aimed at 'restoring integrity to this crucial market,' which he said was 'broken.'"

"'The overwhelming response to the agreement has been a positive one, with almost everyone agreeing that significant reform is needed,' he said. 'It is not surprising that current industry participants, many of whom have significant economic interests of their own at stake, have differing perspectives.'"

Arabian Business. "Bahrain-based Arab Banking Corp (ABC) said it aims to raise $1 billion by selling shares to existing stakeholders, after reporting its second quarterly loss on exposure to the US subprime mortgage crisis."

"ABC posted a loss of $587 million in the first quarter ended March 31, the bank said in a statement late on Wednesday."

"'The loss was almost entirely driven by significant exposure to structured investment vehicles and collateralised debt obligations,' the bank said, referring to financial instruments in which US subprime loans were packaged."

The Darien Times. "Lack of home buyer confidence, and continued 'screaming headlines' of doom and gloom scenarios are the main culprits in the continuing housing crisis, according to a national housing expert. Dr. Lawrence Yun, chief economist for the National Association of Realtors, said housing market activity nationally is at a 10-year low, but he believes the market has bottomed out."

"'Nationally speaking, we’re at a 10-year low. Home sale activity is matching the 1998 level,' said Yun, who added that the boom years of the late ’90s represented an 'overshooting' of the market. 'It is my firm belief... that we are overshooting downwards,' now, he said."

"What’s keeping the market down, he said, is lack of buyer confidence in light of media reports. 'They have the financial capacity, but they are holding back,' he said, adding some buyers are waiting for the prices to drop more before stepping in, while others are simply hesitant to invest in housing with all the dire warnings they see in newspapers and on television."

"One story, picked up by national media and splashed across the television screens and pages of newspapers was that 'in 2007, national median home price declined for the first time since the Great Depression,' said Yun."

"'Unfortunately, this fear factor can be a self-fulfilling prophecy. Buyers hold back, inventory climbs; inventory climbs, prices go down; prices go down,' and that leads to foreclosures, he said. 'We are on the verge of going into an economic recession. If the housing market does not recover, we will certainly go into an economic recession.'"

"Yun said 80 percent of home buyers are first-home sellers, looking to upsize, downsize, or move, but the housing downturn is also keeping many of them out of the market."

"'Many of these listed homes, there are many stubborn sellers,' he said, drawing a laugh from the Realtors. 'Psychologically, home sellers are resistant to lowering price,' because they have put 'sweat equity,' into their homes."

"'They want to buy, but they can’t buy until they sell,' said Yun."

"Going forward, Yun said the Northeast, and particularly Connecticut and areas around 'superstar cities' like New York, will weather the downturn better than others. 'They always seem to defy the laws of gravity,' he said."

"Fixing the issue of sub-prime mortgages, and the predatory practice of some lenders to steer borrowers toward loans they could not afford simply because those loans paid the best commissions, is the goal of the state’s Task Force on Sub-Prime Lending, said Howard Pitkin, the state banking commissioner."

"'Forty years ago, when our mother or father bought a house, you probably had to put 20 percent down, had to have credit without a blemish, the banker probably knew your parents and would hold the loan for life,' said Pitkin. 'Today, even for the informed, the mortgage instruments being used are extremely difficult to understand.'"

"In Connecticut, there is currently $15 billion outstanding in sub-prime loans, with 71,000 families impacted, he said. Eight percent of those families were past due at the end of April."

"'That might mean more foreclosures coming down,' said Pitkin. 'Foreclosures are going to be with us for some time and it’s anybody’s guess how many.'"