Standard & Poor's Monday boosted its expectations for losses on risky loans backing U.S. mortgage securities to as much as 40 percent, suggesting a darkened outlook for the troubled housing market.

US housing prices will fall by a double-digit percentage from already beaten-down levels, resulting in an overall 40 percent plunge by the time foreclosures peak in the second half of 2010.

Manhattan apartment sales plunged more than 50 percent and the average price dropped 21.4 to 24 percent from a year ago, as the U.S. recession forced many who own a piece of the Big Apple to eat humble pie, several reports said.

GMAC said on Wednesday that it has converted to a corporation from a limited liability company, a move that could allow the auto and mortgage lender to sell shares to the public.

Homeowners taking part in the Obama administration's housing rescue program through Fannie Mae and Freddie Mac will now be eligible even if their loan-to-value ratio is up to 125%. That means they can have up to 25% negative equity and still get a refinance.  

Battered mortgage giant Freddie Mac received $6.1 billion in new funds from the Treasury Department to help offset its mounting liabilities, according to a regulatory filing submitted Wednesday.

U.S. mortgage applications plunged to a seven-month low last week as demand for home refinancing loans tumbled 30 percent, data from an industry group showed on Wednesday.

Prices single-family homes declined in April from the prior month, but the pace moderated, suggesting stability is emerging in some regions.

Defaults on privately insured U.S. mortgages rose in May following three months of declines, and the number brought up to date fell, providing new evidence that the nation's housing market is still deteriorating.

The annual fall in house prices in England and Wales slowed for a third successive month in June after rising demand outpaced the supply of homes for sale, property data company Hometrack said in its monthly survey on Monday.

"We're dealing with a problem that probably took us eight years to get into and expecting to get out of it in eight minutes, and it's just not going to happen," one expert says.

Short sales, which have taken off in the past year, have become a way out for some Americans in trouble with their mortgage.  But it already is running into problems.

Home buyers have lost their enthusiasm for the sprawling houses that cropped up across U.S. suburbs over the past decade. Having learned that property values can go down as well as up, they are flocking to smaller homes.

Standard & Poor's on Wednesday cut its ratings on Ambac Financial Group and its bond insurance arm, saying the insurer has "negligible" prospects for writing new business.

U.S. mortgage applications climbed last week from a seven-month low, the Mortgage Bankers Association said on Wednesday, adding to emerging signs that the three-year housing market collapse may be abating.