Some housing bubble news from Wall Street and Washington. Dow Jones, "When it released its preliminary second-quarter operating results early Monday, Hovnanian Enterprises Inc., one of the nation's biggest builders, detailed more pain to come. The much-watched cancellation rate improved slightly - to 29% of gross contracts, from 32%. Hovnanian's home deliveries fell 21% year over year, and officials estimated the company would take between $225 million to $275 million of land-related pretax charges, a jump from the first quarter's $94 million."

"Stung by falling land and house values, the nation's top builders have racked up more than $21.5 billion in charges in the last two years. UBS, meanwhile, noted the impairments are much higher than Hovnanian's $100 million forecast."

"'Given the continued weakness in the broader housing market, which we believe will only be exacerbated by rising foreclosures and the limited availability of non-conforming loans, we believe Hovnanian will need to discount prices further to maintain the necessary sales pace to reduce its leverage,' wrote David Goldberg."

The Des Moines Register. "Jamie Myers seemed the envy of Iowa's home-building industry just a year and a half ago. Coming off his company's best year ever in sales, Myers, president of Regency Homes, was staging elaborate public events for potential home buyers at projects like Michael's Landing, a development that spans 340 acres in a fast-growing region of West Des Moines."

"The site was still mostly bare ground; yet the live music, free catered food, Hummer rides and helicopter whirling overhead suggested a prosperous, promising future."

"On Thursday, Myers sat in the mostly empty headquarters of the family business he took over, wondering if his luck had run out."

"Myers, in an interview last week with the Des Moines Sunday Register, blamed a caustic chain of events — 'a perfect storm' — for the company's decline. Industry veterans such as Bill Kimberley said Regency and a couple of other Iowa builders have fallen victim to an insatiable appetite for growth."

"'All it takes is one little slowdown, one little hiccup, and all of a sudden there's not enough cash flow to pay all that interest on all of these assets and pieces of land that they've accumulated,' said Kimberley, owner of Kimberley Development, an Ankeny-based builder of high-end homes."

"'It's like a craps table. You got all these winnings and profits out there, but you just keep gambling it. You never pull any money off the table. And then all it takes is ... to roll that seven one time and all the money is gone,' he said."

"The company's business plan, Myers said, targeted spending in fast-growing suburbs where homes were in demand. When the market was good, Myers counted on his company to be helped by what he called velocity - the swiftness in which it could build and sell, build and sell. That speed created a cash flow that let it add more land and more projects."

"Like most large builders, Regency bought swaths of land, taking control of its projects from the ground up. And then came the sharp downturn in home buying and the economy that builders and lenders didn't fully anticipate."

"In 2005, the company built 1,062 homes. 'In 2004 and 2005 we were moving through product faster than we could build,' Myers said."

"But by 2007, that number fell to 640. The company infrastructure, meanwhile, had been ramped up to handle 1,000 or more homes."

"Myers...didn't see it, but Regency was not alone. 'That's why you see the largest builders in the country today being affected by this,' he said. 'The ones who build the largest communities are the ones who got hit the hardest, because we all depend on velocity. We deliver to the many, not just to one.'"

The Associated Press. "Shares of Countrywide Financial Corp. tumbled Monday as two analysts said Bank of America Corp.'s planned acquisition for the mortgage lender could be renegotiated to a lower price."

"Friedman, Billings, Ramsey & Co. analyst Paul Miller in a research note said if Bank of America is to complete the deal, it will likely have to reduce the value of Countrywide's mortgage investments between $20 billion and $30 billion."

From Reuters. "The mortgage unit of finance company GMAC LLC on Monday said it needs to raise $600 million by the end of June to pay its debts and avoid 'negative liquidity' even if a $14 billion bond exchange offer is successful."

"'There is a significant risk that we will not be able to meet our debt service obligations, be unable to meet certain financial covenants in our credit facilities, and be in a negative liquidity position in June,' ResCap said in the U.S. Securities and Exchange Commission filing."

The New York Times. "The Federal Bureau of Investigation and the criminal division of the Internal Revenue Service have formed a task force to examine mortgages that were made with little or no proof of the earnings or assets of borrowers, a government official who had been briefed on the matter said Sunday."

"The task force, which was established in January, stepped up its investigation in recent weeks as the financial industry disclosed billions of dollars in additional write-downs from bad mortgage investments. The latest inquiry is broader and deeper than a separate F.B.I. investigation of mortgage lenders that is also under way."

"These days, Jeffrey M. Peek, the CEO of the CIT Group, is trying to erase lots of things from the past: namely, an ill-timed expansion by CIT into subprime-mortgage lending and the costly acquisition of a student loan firm — twin moves carried out near the top of frothy markets that quickly collapsed, leaving CIT on the financial precipice."

"Despite the obvious strains under which CIT now labors — a plummeting stock price, mounting losses, funding woes and a loss of faith among some analysts — Mr. Peek says he wouldn’t have done anything differently."

"'If I was going to look back, maybe I would have gotten out of mortgages a couple of quarters earlier, but we were making good money,' he says, matter-of-factly."

"Changes in automated mortgage underwriting procedures at Fannie Mae will be announced soon, as it addresses rising risks in an ailing housing market, a senior executive at the United States' largest home funding company said on Monday."

"'We are making significant changes to that and we will be rolling them out shortly,' said Tom Lund, executive VP at Fannie Mae, of the software lenders use to automate the early stages of the lending process."

"Lund also expects the housing market to face a prolonged period of working through problems spawned by several years of looser lending that drove record home sales but that led to a massive supply of unsold homes and record foreclosures."

"'I do think that 2008 and 2009 will be difficult years for this industry; we have a lot of overhang,' he said. In the last few years 'we went too far and too wide, and we are changing that ... we need to realign with the risks that we are taking in the marketplace.'"

The Business Edge from Canada. "Despite the recent drop in home sales, Canada's housing market should remain buoyant during the rest of this year, but developers face more difficulty securing loans for projects, analysts say."

"Maureen Enser, national executive director for the Urban Development Institute, says Ontario-based banks, which have felt more of an impact from the sub-prime meltdown because they have fairly close ties to the U.S., are restricting developers' access to capital and likely to demand higher pre-sales, which refer to units sold before construction begins."

"Don Campbell, who heads the Calgary-based Real Estate Investment Network (REIN), says many cities have overbuilt their residential inventories. REIN represents 3,120 investors with $4.2 billion worth of residential holdings across Canada. The group sells research to investors, banks, developers and other industry insiders, but does not sell properties."

"'Right now, there's a lot of fear in the market,' says Campbell, adding sophisticated investors with a long-term view are continuing to buy properties as prices dip. But speculators - especially Toronto condo owners - are starting to panic, fearing that condo values may be headed for a big downturn."

"'Investors have been hoping for a buyer's market again,' says Campbell. 'And now that it's here, people are quite fearful of it.'"

"Benjamin Tal, a senior economist with Toronto-based CIBC World Markets, says prices in some pockets of Western Canada could actually fall. 'The sub-prime story is part of the overall economic story,' he says, adding the U.S. recession will hit Ontario and Quebec hardest."

"But the sub-prime crisis will probably limit Canadian developers' access to capital. '(Developers) feel the pain because their (interest-rate) spreads are much higher now,' says Tal. 'Therefore, it's more expensive (to build) and banks are much more cautious now.'"

The Mercury from Australia. "The state is in the grip of a home mortgage crisis, with as many as five Tasmanian families and homeowners on the one day faced with the dreadful prospect of losing their home."

"The number of house possession orders being sought in the Supreme Court by the major banks and financial institutions has jumped in the past year as increasing numbers of Tasmanians have problems paying their mortgages."

"In February this year, 13 homes in Hobart and four in Launceston were seized after their owners could no longer keep up with debt repayments. In March, another 16 possession orders were granted in the Supreme Court."

"The mortgage crisis is a direct result of the average price of a house in Tasmania having risen to nearly $300,000. While the size of the average home loan in Tasmania is $177,700, many mortgages taken out in the past three years have been much larger."

"Mortgage repayments due on variable loans have also jumped considerably in the past two years."

"Housing pressure is also being felt in well-heeled suburbs such as Sandy Bay and Battery Point. Vicki Flood, of Warrane, is one Hobart homeowner who has run into mortgage problems and is being forced to sell her home."

"On April 15, the Supreme Court granted a possession order to Mystate Financial to seize Ms Flood's home because she had defaulted on two loan repayments of $852 a month in November and December last year. Mystate is still owed $115,138 on a $130,000 mortgage Ms Flood borrowed in September 2004 and is legally entitled to have the entire debt repaid."

"But the lender has agreed to give Ms Flood until June 20 to sell her house on the open market – she hopes to get about $239,000 – before it forcibly repossesses her home. 'What happens then if there is no sale? I just want to know where I stand,' Ms Flood asked Associated Justice Stephen Holt in the Supreme Court."

"'Well, the scene ends up like you see on the television shows – the sheriff or police come in and change the locks,' Justice Holt explained."