Mortgage woes dominate the business page headlines of both the New York Times and Wall Street Journal today. There's big trouble at the Federal Housing Administration, which, hit by huge mortgage defaults, is in danger of seeing its reserves fall below the level demanded by Congress, writes the WSJ. That could lead to the agency calling for a taxpayer bailout - a politically unpalatable situation but one it may not be able to avoid. The agency's troubles stem from the large number of risky loans taken on by private lenders in recent years. The FHA insures private lenders against defaults on certain home mortgages and over the last two years the number of loans underwritten by the FHA has soared, leaving it exposed to increasing defaults. The judiciary isn't overly impressed with the glut of mortgage defaults - or to be more exact the snail's pace at which banks are modifying mortgages to avoid defaults.

The NYT reports on the case of one homeowner who has taken Wells Fargo to court because of the delay in getting the bank to adjust her mortgage, part of a government-brokered financial services industry scheme to avoid mass foreclosures. However, With consumers complaining about the difficulty of getting any response from their mortgage servicers, the effectiveness of the Obama administration’s plan to provide homeowner relief is being threatened, writes the NYT, adding: As they wait for an answer on whether they might qualify, homeowners are succumbing to foreclosure and bankruptcy proceedings and winding up in courts — at times in front of judges who are also frustrated.

There's a new gold rush on and while it's sending metal stocks soaring some analysts worry that the fact that gold is nearing $1,000 an ounce can only mean bad things for the rest of the economy. Mining stocks jumped in Australia and Hong Kong this morning on the news that gold had flirted with the magical $1,000 ceiling, the WSJ reports. (It closed yesterday at $997.70.) In the past the surge in gold often has been quickly followed by devastating business news - Gold hit a record high of about $1,014 in March 2008, just when Bear Stearns was on the verge of collapse before being rescued by the Federal Reserve and JPMorgan Chase, CNN Money reports. This time around though, imminent financial disaster might not on the horizon, More likely traders are looking to hedge their bets a bit as investors begin to worry if the stock market rally that began in March has come too far too fast, CNN Money notes.

Around the first anniversary of the Lehman Brothers collapse, the Guardian reports that a breakdown in communications at the highest level between the US and the UK led to the collapse. It documents how the UK government and financial regulators all believed the Bush administration would prop up Lehman as it had Bear Stearns a few months before. UK banking giant Barclays had been poised to mount a rescue bid for Lehman but the UK government insists it told Treasury Secretary Hank Paulson the deal could go ahead only if sweetened by US money - a version of events Paulson rejects the Guardian reports. He lays the blame on his British counterpart Alistair Darling who he accuses of dithering over Lehman's fate. Sticking with UK banks, the WSJ reports that Lloyds Banking Group is considering backing away from a government program to guarantee its assets and would raise billions of pounds in capital to cover any losses. The UK government currently has a nearly 50% stake in the bank but Lloyds, buoyed by a rising stock price and slowing loan defaults, apparently is growing in confidence that it can stand on its own feet again.

To tech news and reports in the NYT that Oracle's takeover over of Sun Microsystems has hit a hurdle in the form of European regulators. The European Commission has decided extend its investigation into the deal, worth $7.4 billion, because of concerns that the acquisition could hamper development of Sun's significant MySQL open source database software product. But Europe's move isn't just of interest to tech geeks. It pits European regulators against the Obama administration that already has approved the deal. European antitrust officials are more protective of consumers and more confident of the beneficial consequences of intervention [than their U.S. counterparts], the NYT quotes one legal expert as saying.

Finally, news from China that suggests Google's path to world Internet domination might not so smooth after all. The Financial Times reports that Dr Kai-Fu Lee, president of Google China has resigned and will pursue a new private business venture. The news comes after months of Google struggling to compete against domestic rival Baidu and growing regulatory interference from the Chinese government.