Some housing bubble news from Wall Street and Washington. “Hopes for a housing rebound this spring selling season were further diminished Thursday, as Ryland Group Inc. said lower home prices will likely drive write-downs and a quarterly loss as subprime-mortgage fears weigh heavily on the market. The Calabasas, Calif.-based home builder said it expects to post a first-quarter loss on an impairment charge of about $65 million.”

“‘At the end of the fourth quarter, we were cautiously optimistic that pricing had begun to stabilize,’ said CEO Chad Dreier. ‘However, as the first quarter progressed, it became clear that aggressive pricing strategies persisted in several markets, requiring us to write down the value of some of our assets,’ he said.”

“‘Ryland’s strategy of trying to hold pricing was likely unsustainable given the deteriorating market conditions, and was only delaying land charges,’ said analyst Daniel Oppenheim.”

From Briefing.com. “Like many other leading homebuilders, Ryland has been stung by high cancellation rates and a glut of unsold homes driving prices lower, as soft market conditions persist.”

“Preliminary sales for the quarter fell 26% year/year to 2,989 units. The company closed 2,302 units during the period, or about 54% fewer than in the same period last year, amid slowing demand and ongoing concerns about the meltdown in the sub-prime mortgage market.”

From Reuters. “The percentage of home owners with subprime mortgages who are dangerously falling behind on monthly home loan payments rose to a record high in February, according to a First American LoanPerformance report.”

“‘It’s going to get worse,’ said economist Richard DeKaser. ‘Whether delinquencies, foreclosures, what have you, there will be further bad news as the year plays on.’”

“According toFirst American LoanPerformance, 12.4 percent of all subprime borrowers were at least 60 days late on their mortgage payments in February, the highest level the mortgage research unit has recorded since it began its data series on the loans in 1989.”

“Additionally, 14.3 percent of subprime loans sold by Wall Street were at least 60 days behind on payments as of January, the highest level for securitized subprime mortgages since LoanPerformance began tracking them in 1997.”

“‘Too many lenders got too carried away,’ said Jeff Thredgold, (an) economic consultant to Zions Bank. ‘Too many borrowers got dollar signs in their eyes.’”

“‘About 5 to 10 percent of people who could have gotten loans four weeks ago could not get them today,’ said Bob Walters, chief economist for Quicken Loans. ‘They probably won’t be able to get financing in the near future and by near future I mean the next couple of years.’”

“Webster Financial Corp., one of the largest banking companies based in New England, said on Thursday it is closing a mortgage unit and will incur several first-quarter charges.”

“Net charge-offs will total $5.4 million, triple the year-earlier level, hurt by losses on Florida residential construction loans where Webster sees a ‘high probability of loss based on borrower delinquency and market deterioration.’”

The Charlotte Observer. “HSBC mortgage operations in the Fort Mill, S.C., area are taking a hit from restructurings that have closed branches and shifted work to other units.”

“Decision One, part of London banking giant HSBC Holdings Plc., makes subprime loans to borrowers, often with sketchy credit, through independent mortgage brokers. These loans carry higher interest rates than prime loans to borrowers with better credit.”

“The company closed five branches last summer and another seven last month.”

The Boston Globe. “H&R Block Mortgage Corp. said it is closing its Burlington loan office, and its only Massachusetts location, and laying off all 47 employees.”

“H&R Block Mortgage’s spokesman, Ron Iori, said the decision was part of a planned restructuring ‘to change the way we run or operate this mortgage business.’”

“H&R Block Mortgage, which has a dozen offices nationwide, also is closing the Tampa office.”

“U.S. businesses are sitting back and waiting to see how troubles in the housing and mortgage market will work out, but this caution could lead to slower economic growth.”

“The Institute for Supply Management’s purchasing manager’s index released earlier this week fell in March, showing that a factory slowdown that began last fall continues.”

“‘The slowdown is inventory-related and also related to the spill-over-housing industry woes,’ said Ken Mayland, of ClearView Economics in the Cleveland Area. He added that a declining backlog of orders is no recipe for production and payroll increases.”

“‘If businesses pull back, then we will really have a high probability of a recession, because now job growth will really sputter, housing is already sputtering and consumer spending will consequently sputter,’ said Rajeev Dhawan, director of the Economic Forecasting Center at Georgia State University.”

“‘Because 40 percent of home buyers last year were non-prime … borrowers, housing markets may feel some short-term pains, making it less clear whether housing construction has bottomed and how long the housing downturn may last,’ cautioned Federal Reserve Bank of Dallas President Richard Fisher on Wednesday.”

“The labor market may be wilting just as spring gets under way, with warmer weather highlighting the housing sector’s misfortune and its growing toll on the broader economy.”

“‘Everything is pointing to an increasingly rapid pace of job losses,’ said economist Richard Iley. ‘It’s primarily a housing story.’”

“An unusually warm winter may have artificially supported construction employment figures over the past few months. Skeptics now expect a painful return to earth as the true nature of the housing decline becomes more apparent.”

“‘If the labor market begins to deteriorate then it will spread into prime mortgages,’ said Thomas Higgins, chief economist at Payden & Rygel. ‘At that point, the possibility of a recession would start to rise.’”

“With the dominoes of consumer debt and business caution lining up so neatly with the housing downturn, it becomes difficult to find a source of renewed economic vigor that might prevent the whole edifice from taking a spill. In short, the risk of contagion rises.”

“‘Growth is likely to weaken yet further as housing and manufacturing recessions increasingly infect the broader economy,’ said Iley.”

The Associated Press. “Spurred by a sputtering U.S. economy, bankruptcy filings are on the rise in 2007, an increase analysts predict will continue.”

“In the first three months of 2007, business bankruptcy filings rose 60 percent and consumer filings increased by 70 percent, compared with the first three months of 2006, according to data collected by Jupiter eSources LLC.”

“‘Bankruptcies are definitely on the rise,’ said Jupiter Chief Manager Michael A. Bickford. ‘There’s no question.’” “The AACER database, which receives daily filing updates from every court in the nation, reports that overall daily filing averages have climbed by 26 percent since January. On average, 3,316 cases were filed each day last month.”

“‘It looks to me like the economy is deteriorating,’ said Bickford. ‘A prevalent factor is the increase in residential defaults on home mortgages and the subprime situation that’s going on.’”

“The American Bankruptcy Institute, which gets its information from the Administrative Office of the U.S. Courts, reports a 46 percent filing increase from January to March. Last month boasted the highest filing rate in a single month since the Bankruptcy Prevention Act and Consumer Protection Act took affect in 2005.”

“Data from the Alexandria, Va., organization shows a steady increase in filings so far in 2007, with about 50,000 cases filed in January, 55,000 in February and more than 73,000 in March.”

“ECC Capital Corp. said Wednesday that one of its units is suing a subsidiary of Bear Stearns Cos. for more than $20 million in a dispute over the sale of a residential mortgage loan portfolio.”

“Performance Credit Corp., a unit of ECC Capital, alleges that it lost more than $20 million because the loans declined in value between the time the Bear Stearns unit agreed to purchase the loans and when it actually did.”

“The purchases took place between Oct. 10, 2006, and Feb. 9, according to a filing with the Securities and Exchange Commission.”

“A new U.S. accounting rule that allows companies to change the way they value financial securities may have driven up to $20 billion worth of selling in the mortgage-backed securities market in recent weeks.”

“This accounting change has opened up a one-time chance for banks and other financial companies to clean up their balance sheets, especially those saddled with investment losses stemming from the subprime mortgage crisis, analysts said.”

“Regulators fear some companies may be trying to manipulate the standard’s adoption process to avoid recognizing earnings losses. ‘Banks could take losses without running into their income statements,’ said Walt Schmidt, manager of mortgage products and strategy at FTN Financial Capital Markets.”

First quarter bankruptcy filings across the U.S. rose 70 percent compared to the first three months of 2006, according to statistics complied by Jupiter eSource LLC from Oklahoma City, Oklahoma.

The jump in March bankruptcy filings is another indication the U.S. economy is in recession, led by states where the housing boom turned to bust.

The more than 90,000 bankruptcy filings in March were the highest since insolvency laws became more restrictive in October 2005, according to statistics compiled from court records by Jupiter eSources LLC. At a daily rate, filings in March were 30 percent above the pace in 2007.

A short analysis of first quarter national filing trends:

February 2007

Filing Days: 17

Average Filings per Day: 2,917

Spurred by a sputtering U.S. economy, bankruptcy filings are on the rise in 2007, an increase analysts predict will continue.

In the first three months of 2007, business bankruptcy filings rose 60 percent and consumer filings increased by 70 percent, compared with the first three months of 2006, according to data collected by Jupiter eSources LLC, an Oklahoma City company that runs a bankruptcy database called Automated Access to Court Electronic Records, or AACER.

"Bankruptcies are definitely on the rise," said Jupiter Chief Manager Michael A. Bickford. "There's no question."

The AACER database, which receives daily filing updates from every court in the nation, reports that overall daily filing averages have climbed by 26 percent since January. On average, 3,316 cases were filed each day last month. AACER categorizes consumer filings differently than the PACER system run by the Administrative Office of the U.S. Courts, which accounts for slight number variations.

Bankruptcy filings hit an all-time low in 2006, when major corporations enjoyed fat profits and consumer spending was high. Analysts said that drop in filings also reflected a tough new bankruptcy law that took effect in October 2005. The law made bankruptcy an unattractive option for consumers and businesses alike.

The drop, accordingly, was interpreted by some framers of the new laws as a vindication of the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. In a statement last year, Sen. Charles Grassley, R-Iowa, said "It's fair to say that bankruptcy reform has been a success for our economy."

Many bankruptcy experts, however, argued that a strong rebound in filings was inevitable as the economy lost steam. Experts attribute the current upswing in filings to the skyrocketing rate of home foreclosures and dwindling refinancing rates.

"It looks to me like the economy is deteriorating," said Bickford. "A prevalent factor is the increase in residential defaults on home mortgages and the subprime situation that's going on."

On Monday, subprime lender New Century Financial Corp. filed for Chapter 11 bankruptcy protection. At least four others, People's Choice Home Loan Inc., Mortgage Lenders Network USA Inc., ResMae Mortgage Corp. and Ownit Mortgage Solutions Inc., have also filed for bankruptcy. The subprime market is threatened by lessening liquidity and increasing defaults

Bickford said total U.S. bankruptcy filings could reach 1 million cases this year, signaling a return to levels seen before the new bankruptcy laws took effect.

The American Bankruptcy Institute, which gets its information from the Administrative Office of the U.S. Courts, reports a 46 percent filing increase from January to March. Last month boasted the highest filing rate in a single month since the Bankruptcy Prevention Act and Consumer Protection Act took affect in 2005.

Data from the Alexandria, Va., organization shows a steady increase in filings so far in 2007, with about 50,000 cases filed in January, 55,000 in February and more than 73,000 in March.

"The next boom here is coming, but probably not until late 2007 at the earliest," said Samuel Gerdano, ABI's executive director.

"The slightly upward trend seems to be continuing," Gerdano said. "But we'll need to look at numbers over a longer period of time to properly characterize it."

The week before the new bankruptcy law took affect in October 2005, an onslaught of 500,000 consumers raced to file a daily average of 70,000 filings, according to ABI. The new rules imposed tougher filing restrictions designed to keep bankruptcy numbers low.

"That surge exhausted a lot of the demand for bankruptcy," said Lois R. Lupica, law professor at the University of Maine. "But the exhausted demand is expiring."