| Lenders' pitches aiming higher
Despite the mortgage meltdown, the blizzard of advertising for home loans continues.
With the subprime market in tatters in the wake of record defaults and foreclosures, fewer pitches scream "Bad credit? No problem!" Instead, lenders struggling to remain profitable are targeting people who have good credit and plenty of home equity.
With fewer homes being sold -- and, therefore, fewer loans taken out to finance purchases -- mortgage firms that have survived the subprime shakeout are focusing their marketing on persuading homeowners to refinance.
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The Markets Wait On U.S. Treasury's Credit-Crunch Fix
The markets' lukewarm response Monday to U.S. Treasury Secretary Henry Paulson's effort to calm credit-crunch fears by offering a little more information about his department's plan to ease the subprime crisis emphasized that investors are anxious to see firm details. The Dow Jones industrials shed 0.43% to 13314.57. The plan with the mortgage industry, which could be announced later this week, aims to shift many troubled subprime borrowers into more sustainable home loans before the interest rates on their adjustable-rate mortgages reset higher. About 1.5 million subprime adjustable-rate mortgages are expected to reset higher in 2008, and a record number ... .
A lender's recipe for downfall
The home loan program was dubbed South Street.
It turned the idea of credit risk on its head. Consumers just exiting bankruptcy could get a mortgage with few questions. They could have some of the lowest possible credit scores. And they didn't have to submit any pay stubs or tax returns.
Subprime mortgage lender Fieldstone Investment Corp. of Columbia created the loan program during the real-estate gold rush in 2004 as competitors flooded the market.
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Housing tilting economy down
It's not a pretty picture, and it didn't have to come to this.
The worst housing slump since World War II is showing no sign of abating. Manufacturing activity is hinting at recession. Employment is weakening. The Standard & Poor's 500 has dropped about 4 percent during the last week. The mistakes banks and brokers made with mortgage-related bonds have left a lingering credit crunch, or a reluctance by lenders to make affordable loans to consumers and businesses.
Investors have gone into the new year with a dreary attitude, and Wall Street analysts are warning investors to be careful.
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