Some housing bubble news from Wall Street and Washington. MarketWatch, "Sales of new U.S. single-family homes tumbled 2.5% in May to a seasonally adjusted annual rate of 512,000 as sales in the West fell to a 26-year low, the Commerce Department estimated Wednesday. New-home sales were down 40.3% compared with a year earlier. The median sales price in May was $231,000, down 5.7% from a year earlier."

"In all of 2007, 776,000 new homes were sold, down from 1.05 million in 2006."

"The figures likely overstate the number of sales, because they don't account for canceled sales. The report is based on contracts signed, not sales closed. Inventories are likely understated because of cancellations."

From Bloomberg. "Purchases of new houses reached an almost 17-year low of 501,000 at an annual pace in March. The last time they were lower was in September 1991."

"'Housing still occupies a major place in this ongoing, rather unique and rather strange economic slowdown,' David Seiders, chief economist at the builders' group, said in a conference call last week. 'I do expect the sales volume to erode somewhat further in the months ahead.'"

The Charlotte Observer. "Average Charlotte-area home prices have fallen for the first time over a 12-month period since 1991, figures released Tuesday show. Meredith Baker of Indian Trail has had to reduce the price of her three-bedroom house, which has been on the market since last July, she said. It's listed for $173,500, about $10,000 less than originally priced."

"The economy has made it difficult for would-be buyers to get loans, she said. The house was under contract at one point, but that fell through in late April, Baker said. Now her family, which is building a house nearby, is living with her mother and might have to move back into the old house if it doesn't sell soon, she said."

"'Whatever has happened with the market, that has brought us to this stumbling block,' Baker said. 'We'd like to have this (new) home, but we're over and done.'"

The Baltimore Sun. "Caruso Homes Inc., a homebuilder operating in Maryland and other Mid-Atlantic states, has filed for bankruptcy protection, blaming what it called the 'double whammy' of the credit crunch and falling home prices. The company said it has had to reduce home prices as a result of the nationwide housing slump, and couldn't continue to pay its debt on land it owns as a result."

"'The recovery is slower than we expected, and just looking into the future it doesn't look like the rebound in the market will be something we can withstand with the current pricing in the market,' said Chris Block, VP of operations for Caruso."

The Press Enterprise. "In a recent interview, Mike Van Daele, the CEO of Riverside-based Van Daele Development, said because he is one of the few remaining privately owned builders, he was free to go at a slower pace than the giant public companies who grew with abandon to please their shareholders and got caught with excess land holdings that have plummeted in value."

"Q: So you are building houses rather than waiting to clear standing inventory?"

"A: We don't have standing inventory because we are pricing our homes to where 30 to 40 percent of households can afford to buy them. It ultimately required about a 50 percent drop from our peak prices in December of 2005."

The New York Times. "The Illinois attorney general is suing Countrywide Financial, the troubled mortgage lender, and Angelo R. Mozilo, its chief executive, contending that the company and its executives defrauded borrowers in the state by selling them costly and defective loans that quickly went into foreclosure."

"'People were put into loans they did not understand, could not afford and could not get out of,' said attorney general, Lisa Madigan. 'This mounting disaster has had an impact on individual homeowners statewide and is having an impact on the global economy. It is all from the greed of people like Angelo Mozilo.'"

"Madigan also asked that Mr. Mozilo contribute personally to the damages."

"Former employees told Illinois investigators that Countrywide's pay structure encouraged them to make as many loans as they could; some reduced-documentation loans took as little as 30 minutes to underwrite, the complaint said."

"Even more surprising, Ms. Madigan said, was her office's discovery of e-mail messages automatically sent by Countrywide to its borrowers offering complimentary loan reviews one year after they obtained their mortgages from the company."

"'Happy Anniversary!' the e-mail messages stated. 'Many home values skyrocketed over the past year. That means that you may have thousands of dollars of home equity to borrow from at rates much lower than most credit cards.'"

Final Call News. "Looking to capitalize off of someone else's misfortune with a foreclosure sale? Don't look in Philadelphia because Sheriff John Green has stayed the foreclosure sales and instead is offering help and hope to beleaguered homeowners."

"'More of our neighbors, our families and our friends are falling behind on their mortgages and losing their homes to sheriff's sale. My staff and I watch the suffering every day and witness the heart-wrenching scenes as families lose their primary means of wealth-building and face eviction,' wrote Sheriff Green. 'In Philadelphia, the number of sheriff's sale properties has increased from an average of 300 to 400 per month to more than 1,000."

The Star Ledger. "Most home foreclosures being processed in New Jersey are illegal, a growing group of attorneys contends, because lending institutions cannot prove they own the debt they are trying to collect."

"Judges in at least four New Jersey counties already have halted foreclosures, using a federal court ruling in Ohio as precedent."

"'This is starting to creep up all over the state and all over the country as people start to realize these banks don't really know who owns the (promissory) note,' said Peggy Jurow, a senior attorney at Legal Services of New Jersey."

"There were 34,457 foreclosures filed in New Jersey in 2007. The vast majority, 96 percent, were processed by the State Office of Foreclosure with no answer from the defendants."

"'These lawyers are trying to grasp on the smallest legal issue, and they're losing sight of the justice involved,' said Ralph Casale, a Denville-based attorney who has represented lenders in foreclosure for more than 30 years. 'It comes down to this: Were you given the loan? Have you paid it? If you haven't paid it, doesn't the person who loaned you the money have the right to collect?'"

"Every scandal needs a scalp. The subprime mortgage crisis, which has been elevated to prime and is still going strong, finally has a name and a face: Ralph Cioffi and Matthew Tannin, former hedge fund managers at Bear Stearns Cos. The duo was indicted last week."

"'The defendants and others led investors to believe that the High Grade Fund was only slightly riskier than a money market fund,' according to the indictment."

"'What's the difference between what Cioffi and Tannin are accused of and what a CEO or CFO might say' suggesting the worst of the crisis is behind us? wrote Joan McCullough, macro strategist at a brokerage in Hauppauge, New York, in her June 20 daily commentary."

"This isn't hypothetical. Some Wall Street CEOs made rosy comments just weeks before they reported huge losses and headed to the market (sometimes more than once) for more capital."

"'The bigger issue to make securities fraud stick is the mispricing of assets,' said Janet Tavakoli, president of Tavakoli Structured Finance in Chicago. In late May, early June, the hedge funds' creditors (Wall Street investment banks) 'challenged the April prices and asked for more margin,' she said. 'Yet they failed to mark down their own books that quarter.'"

"Instead, Wall Street's finest continued to bring CDOs to market backed by the same distressed and depressed collateral. 'They basically lied,' Tavakoli said. 'They knew or should have known' the CDOs they were packaging were 'over-rated and overpriced. They were obliged to disclose' that to investors."

"If she's right, Cioffi and Tannin will turn out to be the tip of the iceberg, with more investigations and indictments to come. The bigger the carnage, the more scalps needed as a suitable sacrifice."

From Fox 6 San Diego. "A Chula Vista resident sought by federal law enforcement agencies as part of a nationwide crackdown on mortgage fraud crimes turned himself in Tuesday at the FBI office in Kearny Mesa, authorities reported."

"Angel Armendariz, 27, was among six people indicted in San Diego last week as part of a multi-agency probe dubbed 'Operation Malicious Mortgage.'"

"In the early afternoon, agents acting on a tip tracked down another indicted Southern Californian, Rafael Santiago, 39, of Riverside, the FBI reported. Three other suspects in the case -- Abner Betech, 27, Aviva Betech, 29, and Said Betech, 32, all of San Diego -- were arraigned on Tuesday."

"The sixth person indicted locally in the case -- 25-year-old Chula Vista resident Lucette Montane -- remains at large, according to the FBI."

"The defendants allegedly failed to fund loans as promised, but nonetheless received commissions and other payments from lenders, sellers and buyers when the borrowing agreements closed."

"The complaint further alleges that Creative Financial Solutions Inc., a mortgage brokering company...obtained mortgage loans for unqualified or 'unknowing' borrowers by, among other things: concealing true purchase prices of homes by submitting false purchase contracts; submitting bogus loan applications; concealing the fair market value of homes; using misleading appraisals; and submitting false bank statements and income documentation.'"

National Mortgage News. "As Congress winds toward its summer recess, the mortgage lending and finance problems linger. With rising fuel costs, hints of inflation, record levels of both foreclosures and mortgage fraud - Washington lawmakers are considering a number of bills designed to shore up the sagging housing market."

"As you recall from my last article, the New York Attorney General, Andrew Cuomo, has pursued an agreement with Fannie Mae and Freddie Mac relative to appraiser independence. However, as of this writing, the amendment has not been considered."

"While Congress is poised to act, the question is how and when. With 90% of appraisers in a recent survey indicating that they had been inappropriately pressured, many in the industry see a clear correlation between the worsening mortgage crisis and the compromise of appraiser independence."

"Lately, many are asking a simple question that continues to go unanswered: How much higher do foreclosure rates need to rise and mortgage fraud cases increase before Congress and regulators realize that appraiser independence is a real problem that affects the safety and soundness of our entire banking system?"