Some housing bubble news from Wall Street and Washington. MarketWatch, "Home prices across 20 major U.S. cities have dropped a record 15.3% in the past year and are now back to where they were in the summer of 2004, according to the Case-Shiller home price index released Tuesday by Standard & Poor's. Prices in the 20 cities are now down 17.8% from the peak two years ago."

"Prices were lower in April than they were a year earlier in all 20 of the major metropolitan areas as tracked by the Case-Shiller index. Home prices surged in 2003 through 2006, climbing by a cumulative 52%, according to Case-Shiller. Since then, homeowners have given up half of their gains from earlier in the decade."

From Consumer Reports. "The April index showed thirteen record low annual declines, and 10 of the declines were in double digits. Las Vegas and Miami continue to share the dubious distinction of being the weakest markets over the past 12 months returning -26.8% and -26.7%, respectively."

"These two markets witnessed some of the fasted appreciation of the 2004-2005 period, rising 53 percent and 32 percent respectively."

"The National Association of Realtors said than that the housing recovery was being hindered, in part, by what it called restrictive lending practices. It said it saw evidence of growing interest by prospective home buyers, but some are still having difficulty finding financing."

From Bloomberg. "Three months after Fannie Mae and Freddie Mac won the freedom to step up home-loan purchases, the government-chartered mortgage-finance companies are doing what critics in the Federal Reserve and Congress had predicted."

"Instead of using powers granted by Congress to buy jumbo loans for the first time, Freddie Mac and Fannie Mae are purchasing their own mortgage-backed securities, helping reduce losses, company filings show."

"Since the rule change took effect in March, Fannie Mae has packaged $24 million of jumbo loans into securities, while Freddie Mac added $220 million, according to the Inside Mortgage Finance newsletter. In April, the companies spent more than $32.4 billion to buy their own instruments, regulatory filings show."

"The slowness of Fannie Mae and Freddie Mac in injecting cash for new jumbo loans may have exacerbated the housing slump in markets including California and Florida, where prices have already fallen more than the national average, said Jerry Howard, president of the National Association of Home Builders."

"'Had they been quicker into the marketplace, they could have helped slow the downward spiral in housing prices,' Howard said."

"'Fannie and Freddie are catering to low-risk homeowners with high credit scores and a lot of equity in their homes,' said Dan Green, a loan broker in Cincinnati and Chicago. 'I'm sure there will be some high-cost areas in the country that will benefit. They just don't happen to be Florida, Michigan, California, Nevada.'"

From C-Ville.com. "Just a few months ago, Micah Davis, a broker for Mahone Mortgage, thought he had a deal done. He had run the customer's numbers through Fannie Mae's automated underwriting system, and the system had blessed the customer with an approval for a mortgage. Then came June."

"That was the month when Fannie Mae updated its system, making mortgages harder to come by. Davis ran the same customer's numbers through this month-the very same numbers-and the system spat out a 'refer,' meaning that Davis couldn't do the loan."

"'Nothing had changed,' says Davis. 'I'm going to be able to do it because, until October, they're honoring anything that was run before June. But all things being equal, it went from an approval to a refer.'"

"Two things are certain. The days of 100-percent financing-no down payment-are gone. And the baseline credit score you need for approval has risen sharply."

"'It is more difficult to qualify borrowers for loans these days,' says Peggy Deane, VP of mortgage services for Member Options, which provides mortgages for the UVA Credit Union. Dean says the secondary markets, institutions like Fannie Mae and Freddie Mac who buy loans from originators, have tightened up their guidelines around the county."

"'Even a year ago, for credit scores in the 500s, I won't say those loans were easy to come by, but they were certainly possible,' Deane says. 'That's not the case today. We're seeing a migration to a minimum of a 620 on more programs.'"

"Borrowers in Charlottesville do have an advantage over homebuyers in larger cities like Boston, Washington, D.C., and Phoenix, says Doug Adamson of Bank of America. Because of the slump in housing prices, many larger cities are considered declining markets. That label limits some loan options."

"Deane says that generally people are going to have to have some money saved to buy a house now that 100-percent financing has disappeared."

"'And there's going to be a whole lot more focus on how they manage their credit,' she says. 'For those who have the income and credit history to qualify, I'd say it's just as easy as it always was.'"

"Societe Generale, the French bank buffeted by subprime losses and a rogue-trading scandal, said it will wind up a $4.3 billion structured investment vehicle in a move that will repay senior debt, but leave holders of the lowest-ranked debt with nothing."

"SocGen moved the fund's assets on its balance sheet last December and provided it with a liquidity facility to prevent a forced sale of its assets."

"The bank said in a statement Tuesday that the liquidity facility is set to expire June 26 and that it's decided not to renew it 'in view of the current market situation.'"

The Post Crescent. "The latest data shows that there is no slowing in mortgage foreclosures across the nation. Wisconsin is not shielded from the problem, though it isn't as dramatic as it is nationally, according to RealtyTrac."

"'The Federal Reserve has projections of a two-year window when things should start to level off,' said Laurie Anne Lee, a credit counselor...banking industry veteran and former mortgage broker. 'But there's so many factors that go into foreclosures that I think 2010 is a conservative estimate.'"

"Lee believes consumers are facing higher debt loads because of increasing daily living costs driven by record gasoline prices, coupled with a weak economy and soft job market."

"'There's more of a chance, people may begin to miss mortgage payments because they just can't keep up,' she said."

"John Waite, owner of Full Spectrum Mortgage in Appleton, believes the financial community and Wall Street investors are the main culprits. He said mortgage-backed securities were popular investments because of their quick returns."

"'When this all started five or six years ago, someone needed a credit score of about 640 to get a loan, but by the time the hammer fell, lenders were offering 100 percent (loans) to someone with a 570 credit score,' Waite said."

From Las Vegas Now. "People in the valley are losing their homes to foreclosure at alarming rate. Now they are lashing out -- destroying those homes before the bank takes over."

"For more than a week, neighbors in a Spring Valley subdivision watched their neighbor go on a rampage. 'This man was able to go berserk -- throwing things around throwing furniture,' said a neighbor."

"On Friday, the man was seen throwing junk into his backyard. His neighbors say it's nothing compared to what has happened over the past few nights, 'Throwing things around -- throwing furniture all over.'"

"It went from dumping boxes of junk into the backyard, to ripping cabinets off the walls. On Saturday, neighbors say a flood of water came gushing from the garage."

"Tom Calabesea sells foreclosure properties. He says vandalism is happening more and more. He showed one home with everything taken, 'Before they left, they took the oven, stove, dishwasher, microwave and sink.'"

"They also slashed the carpet, threw motor oil it and took the water heater. 'They want to get even with the bank because they didn't make there payments, if that makes any sense,' said Calabesea."

"Neighbors called the police on the man in Spring Valley, but because he still owns the home, they couldn't to stop him. Real estate broker Tom Blanchard says disgruntled foreclosure victims are getting away with vandalism because there are so many foreclosures the banks can't keep up with."

From Fortune. "Builders constructed far more homes from 2002 until 2006 - the peak bubble years - than could possibly be absorbed by the normal growth in households."

"As a result, the market is now swamped with one million new and existing homes for sale that aren't occupied, and hence need to sell quickly. That's a multiple of the figure in most downturns, and it testifies to the duration and girth of the bubble."

"The key player in any recovery scenario is the first time buyer. When the first-timers are absent, the entire buying chain gets frozen."

"Today, newbies are coming back. Why? For the first time in years, entry-level homes are affordable. Builders have slashed prices, and what they're building tends to be far smaller than the McMansions of the boom, selling for far lower prices."

"KB Home's average selling price dropped to $248,0000 in its February quarter, versus $267,000 a year earlier. In 2006, KB's basic model in Victorville, Cal., a former boomtown east of Los Angeles, took up as much as 3,800 square feet and sold for $328,000."

"Today, its stripped down offering goes for $220,000, at less than half the size."

"So the first time in a decade renters can carry the mortgage payments and taxes on a new house for what they're paying a landlord. Call it the New Affordability."

"One event has the potential to slow or even derail the recovery: A sharp rise in interest rates. If they rise to 8% or higher because inflation rebounds, it would take a far bigger drop in prices to make new and existing homes affordable."

"The New Affordability is now in place. But if rates rise, we'll have to establish a New New Affordability - at even lower prices."

From Wave TV 3. "The slumping housing market is affecting how southern Indiana home builders are marketing their homes. The annual Southern Indiana Home Expo which highlighted homes $500,000 and up is now a thing of the past. Now, homebuilders are simply trying to get more homes seen -- many less expensive homes."

"When you talk to people in the new homes business, the conversation doesn't get too far these days before you hear something like this: 'I don't think in the next 10 or 20 years you're going to see houses at better prices than they are right now,' says Mike Campbell, the chairman of the 2008 Southern Indiana Parade of Homes."

"And some prospective home buyers are buying that. In the first three days of Southern Indiana's first ever Parade of Homes, 6 of the 33 on display have already sold."

"'We've built homes in the $600,000 range, but our company has adapted to what the market has told us the need is for $130,000 and $135,000,' says Bill Burns, owner of Aristocrat Homes (and) also a realtor."

"Instead of picking one fancy subdivision to host a home expo and charge $10 a person like they used to, this year southern Indiana homebuilders are showcasing more modest homes from Jeffersonville to Georgetown and admission is free."

"The struggle for realtors trying to sell existing homes continues. Compared to this time last year, home sales are down 22-percent in southern Indiana and down 21-percent in Louisville."

From Fox 28. "The nation's housing crisis is definitely being felt here in Michiana. Home sales in the area are down about 18-percent."

"When Anne Farthing was searching for her new home the wide selection came in handy. 'We were pretty particular about what we wanted and there were a lot of options out there for what we wanted, so it didn't take us long,' explained Anne."

"Many buyers are getting a deal by taking advantage of foreclosed properties. Real estate agent Mary Dunfee says 'Banks they want to move their inventory, so they're pricing these homes to sell or these properties to sell within 30 to 60 days.'"

"On top of that, sellers desperate to get their home sold in the saturated market are offering special incentives."

"In this market realtors say make sure your home is priced correctly and looking great. That's advice Anne is taking now that she needs to sell her old home, but she also realizes it doesn't hurt to have a back up plan."

"'We plan to rent it out if it doesn't sell within the next couple of months.' she shares. 'I'm just hoping it sells that's all I can ask for.'"