Some housing bubble news from Wall Street and Washington. New York Times, "The chief executive of Lehman Brothers, Richard S. Fuld Jr., stepped up to the microphone on Monday morning. Mr. Fuld started off the bank's earnings call, responding to analysts who said they wanted to hear from him. He did not take part in last Monday's call when the bank warned that it would lose $2.8 billion in the second quarter and would raise $6 billion from investors."

"The $2.8 billion loss was in large part caused by $4.1 billion in write-downs on mortgage investments."

"Mr. Fuld faced toughed questions from analysts Monday about Lehman's earnings power. They questioned the way Lehman values assets that are hard to value, like mortgage investments."

"'The general question is: have you taken sufficient write-downs?' asked Michael Mayo, an analyst with Deutsche Bank. 'The reason I ask is there are cases of other top management officials at other companies saying they were finished and then other quarters, they had big write-downs again.'"

"Mr. Fuld admitted that the firm had made missteps in its mortgage business - once one of the strongest on Wall Street."

"'We made active decisions to deploy our capital, some of which in hindsight were poor choices because we really didn't act quickly enough to the eroding environment,' he said during the conference call."

"Seven large financial companies - Bank of America, Citigroup, JPMorgan Chase, Lehman Brothers, Merrill Lynch, Goldman Sachs and Morgan Stanley - have since last July written down the value of the assets they hold by $107.2 billion, gutting their earnings and share prices. That is nearly half of the combined $254 billion in profits those seven firms earned from 2004 through middle of 2007."

"Worldwide, the write-downs total $380 billion, much of which reflects a plunge in the value of tricky mortgage investments."

"As the tally of losses keeps growing, many bank executives - and their shareholders - keep asking the same question: When will the pain end? But the finish line just seems to keep moving further away."

"'It's a fairly unique situation, that you would give so much back,' said Alec Young, global equity strategist for Standard & Poor's Equity Research. 'The industry did enjoy real salad days over that period, but now the write-downs and losses have been so huge. It's a significant percentage of the money generated.'"

From Bloomberg. "American International Group Inc., the world's biggest insurer, ousted CEO Martin Sullivan after record losses, a sagging stock price and criticism from the man he succeeded in 2005, Maurice Greenberg."

"Sullivan becomes part of an exodus of CEOs from companies including Citigroup Inc., Merrill Lynch & Co. and Wachovia Corp. that underestimated how badly profits would be hurt by the collapse of the U.S. subprime mortgage market. AIG posted more than $13 billion in quarterly losses after Sullivan assured investors in December that writedowns tied to housing would be 'manageable.'"

"AIG's financial-products unit issues credit-default swaps, contracts that promise to reimburse investors for losses on securities that included subprime assets. The business started issuing swaps a decade ago under Greenberg."

"Those guarantees declined in value by about $20 billion in the past two quarters. The financial products business was co- founded in 1987 by Joseph Cassano, a former executive at Drexel Burnham Lambert, the securities firm that helped popularize 'junk-bond' investing before it collapsed. Cassano stepped down in February."

"'Shareholders' value has been diluted,' Greenberg said in a telephone interview in May. 'That makes you unhappy, to say the least.'"

"Pressure on Sullivan intensified June 6 when AIG said the U.S. Securities and Exchange Commission and the Justice Department were probing the way AIG valued financial products customers used to manage credit risk."

"New York state regulators disclosed their own inquiry on June 13. U.S. and state probes into AIG's accounting led to Greenberg's departure in 2005."

From Portfolio. "The collapses of two Bear Stearns hedge funds last year were the first crashes in the credit crisis' yearlong slow-motion highway pileup. After a long investigation, federal prosecutors in the Brooklyn are now close to seeking indictments in their investigation of the funds' collapse, Kate Kelly of the Wall Street Journal reports."

"According to lawyers with interest in the case, the former managers of the fund, Ralph Cioffi and Matthew Tannin, could be charged with securities fraud within the next week, Kelly reports."

'The investigation by the U.S. attorney's office in Brooklyn is part of a nationwide effort by the Justice Department, F.B.I., and Internal Revenue Service into whether crimes were committed when the subprime-mortgage market collapsed."

From Reuters. "Credit rating agencies will face mandatory new European Union regulation, EU Internal Market Commissioner Charlie McCreevy said on Monday, following criticism of their role in the U.S. subprime crisis."

'The new rules would affect agencies including Moody's, Standard & Poor's and Fitch, which dominate the hitherto lightly regulated sector."

"McCreevy said in a speech that self-regulation had proved insufficient, calling their voluntary code of conduct 'a toothless wonder.'"

"Structured products backed by mortgages were highly rated by agencies but quickly sank in value and became untradeable, forcing banks to write down billions of dollars."

"Measures announced by the rating agencies themselves were also insufficient, McCreevy added. Agencies also face tougher regulation in the United States, where the authorities want them to use a separate system for rating structured products."

"Allen Blewitt, CEO of the Association of Chartered Certified Accountants, said that rating agencies 'have for too long had the luxury of not having to adhere to good governance and oversight procedures.'"

"'The fact is that despite the checks on compliance with the (International Organisation of Securities Commissions) code, no supervisor appears to have got as much as a sniff of the rot at the heart of the structured finance rating process before it all blew up,' McCreevy said."

The Pioneer Press. "The pitch went like this: Just show up at the closing and you'll pocket $5,000. The investment company uses your name and credit to get a zero-down mortgage for a new home, carves its management fee from the loan and resells the property fast, handling the mortgage payments until then. Cost to you: zero."

"That's what buyers heard. It was simple, and it worked over and over again, coaxing more than 60 people in Minnesota and Wisconsin to buy hundreds of new homes in the past few years that they never intended to live in, or even really own, according to buyers and a search warrant affidavit filed in Hennepin County District Court last August by Eagan police Detective Rich Evans."

"And by most accounts, it made 33-year-old Michael Prieskorn a wealthy man. The former Plymouth resident and his companies remain the subject of a federal investigation, according to Evans and several buyers. If allegations prove true, it would be the largest mortgage fraud scheme to surface in Minnesota."

"Michael Bohn, a 28-year-old real estate agent in Plymouth who arranged loans for many Prieskorn deals, said he bought three homes himself. 'Whether he's in Chicago, whether he's in Florida, whether he's dead, who knows,' Bohn said. 'There's a lot of people unhappy with him.'"

"In 2006, the Twin Cities was awash in stone and Tyvek. Home builders - local and national names alike - still were on a construction bender that hatched neighborhoods out of cornfields."

"Bloated home values were peaking, inventory was piling up, and builders were looking to get empty, unsold homes off their books."

"Prieskorn walked into the fray, buyers and associates say, providing builders just what they needed: credit-worthy people to buy not just one but several properties in one fell swoop."

"Prieskorn's purchase arrangement is laid out in a three-page investment summary distributed to some buyers, one of whom gave a copy to the Pioneer Press. The document calls the investment 'virtually risk free for the investor,' even though buyers are on the hook for sizable mortgages."

"Yee Thao, a payment processor in Blaine with six children, said he ended up with mortgage debt totaling nearly $1 million. Thao said his nephew pressured him into buying three houses from Pulte Homes in a Prieskorn deal. Thao said his nephew told him that Prieskorn's own parents bought properties this way and that someone would have sued Prieskorn if the arrangement was no good."

"Thao said he resisted but ultimately figured the $15,000 would help pay for his son's university tuition. The lender on all three mortgages, arranged by agent Bohn, was SunTrust Mortgage. Thao said he never saw the loan applications and has no idea how his income was stated. Like other buyers, he also never saw the properties he was buying."

"Bohn said in an interview that incomes weren't doctored on the loan applications. He said SunTrust had a particularly generous no-document loan program at the time that allowed a single buyer to purchase multiple properties as long as the total loan amount was less than $1.5 million. At the time, home loans were still flowing like water."

"'You didn't even have to put down if you had a damn job back then,' Bohn said."

The Star Telegram. "People are always moving to Ronay Drive. But they don't stay long. Within months, many find themselves facing foreclosure, saddled with high interest rates on loans for thousands of dollars more than their homes are worth."

"The quiet neighborhood, where residents say homeownership is as much a dead end as the cul-de-sacs at each end of the street, is at the heart of the subprime-mortgage crisis."

"More than half of the 56 homes on Ronay Drive have been posted for foreclosure at least once since August 2005, and eight are scheduled for foreclosure in July. Nine others are now for sale."

"Residents say they have found anything but the happy homes promised in the name of Houston-based real estate and finance company CasAlegria."

"John Rentz, CasAlegria's top broker, said his company has done nothing but extend homeownership to people who would not otherwise qualify. He said the complaints are based on misinformation."

"'Some individuals, unable or unwilling to responsibly manage their financial affairs, may see a company that has provided them with an extremely positive financial opportunity as the source of their dissatisfaction,' Rentz said."

"Homeowners along Ronay Drive admit they weren't the savviest buyers. Many were first-time home buyers without the financial advantages of good credit. Some were undocumented immigrants drawn to CasAlegria's 'no Social Security number needed' pitch."

"They knew that the interest rates were high, but they believed that they would be able to refinance within a year or two with the good credit they would build up. Some quickly learned that wouldn't happen."

"Victor and Maribel Munoz have tried unsuccessfully to refinance their mortgage, with its interest rate of 10.49 percent. They've invested $20,000 in the three-bedroom house, but Victor Munoz is now working far fewer hours than he had been, and the couple say walking away may be the only option."

"The house, like many in the neighborhood, is on the tax rolls at a value far less than the couple owes on it. 'We're looking at maybe just leaving the home,' Maribel Munoz said last week."

"Homes that make it to the foreclosure sale on the courthouse steps are typically purchased back by CasAlegria. Then, a blue-and-white CasAlegria sign will reappear on the front lawn, advertising the home for sale once again."

"'Prestamos Faciles,' the sign reads. 'Easy Financing.'"

The Chatham Daily News. "If a poor credit record forced you into a high-risk mortgage, you might end up in the same situation as Rod and Joyce Marentette. The Chatham couple are perplexed as to why, after never missing a payment for the three-year term of their mortgage, they are being dumped by their lender -- Xceed Mortgage Corporation of Toronto."

"Joyce and Rod were married in May of 2005. Less than two weeks later, they purchased a home on Patteson Avenue. Then in September of that year, the couple suffered a loss of income, sending their finances into a nose-dive. But, they scrimped and saved -- sometimes going without food themselves so their four children could eat -- to make sure they never missed a mortgage payment."

"However, their financial situation left them unable to pay other bills, including a credit card and cellphone bill. Despite their current financial woes, the couple figured if they make their mortgage payments, it would be renewed."

"The Marentettes were shocked when they received a letter in mid-March from Xceed stating the company would not be renewing their mortgage, which came due on Friday."

"'There are a number of reasons why we have decided not to renew your mortgage,' stated the letter. 'These may include missed mortgage payments and/or a deterioration in your credit.'"

"The letter strongly recommended the couple arrange to find another lender, because if they fail to discharge their mortgage by June 13, Xceed will begin legal action to collect the $93,000 the couple still owes on their home. Xceed has since given the couple until the end of June to find another lender."

"Reluctantly, they have put their home up for sale, because they have been unable to find another lender to give them a mortgage."

"Richard Wertheim, spokesman for Xceed, told The Chatham Daily News the dilemma facing the Marentettes 'is not really related to them directly.' The Marentettes have been caught up in a financial situation created by the collapse of the asset-backed commercial paper market on Aug. 13, 2007, he said."

"'Up until that time, virtually all of the funding for Xceed's mortgage business came from that kind of security (asset-backed commercial paper),' Wertheim said. 'When that market evaporated, so did the funding for those kinds of mortgages.'"

"Being informed by The Daily News about the situation provided little solace for the Marentettes. 'I worked hard and I still get screwed,' Joyce said."

The Houston Chronicle. "Carole Hackett has some high-level management jobs to fill. But the vice president of human resources of The Methodist Hospital is having trouble because of the slumping real estate market."

"Not in Houston, mind you. Hackett's problems are in Michigan, Illinois and Ohio. That's because when Hackett identifies promising candidates for the vice president of quality and key nursing director positions, they can't move."

"Since about January, good candidates from the Midwest and beyond have been saying: 'I'd love to come to Houston, but there is no way I can sell my house,' said Hackett."

"'In this stage of the countercyclical economy, you would expect mass migration to Houston,' said Barton Smith, director of the Institute for Regional Forecasting at the University of Houston."

"But the city hasn't been flooded by out-of-state license plates, and one explanation is negative equity - people owe more on a house back home than it's worth so they're stuck unless they're willing to eat a big loss."

"Companies have been footing the bill on their employees' closing costs for decades, Smith said. But today, to cover the negative equity, the price tag could easily run in excess of $100,000. A company might pay that for a top-notch senior officer, Smith said, but not a middle manager."

"Roger Ghinelli realizes the predicament he's in. He lives in Sterling Heights, Mich., a suburb of Detroit, and lost his human resource manager's job last year at a small engineering company."

"Ghinelli has been running traps for jobs in Houston. But Ghinelli's two-bedroom, two-bathroom condo is weighing him down. Two similar condos in his complex have been for sale more than a year."

"He won't just walk away from the condo he bought 10 years ago for $125,000, and he isn't permitted to lease it. It makes him wonder if he'll ever be able to take a sales or recruiting job in Houston if he gets one."

"'I'm not even sure why I'm doing this,' he said."