Affordable Homes in Every State

September 27 2007 BusinessWeek.com In Greenwich, Conn., Boston, and many parts of California, a four-bedroom house can easily set you back more than $1 million, while in parts of Texas and in the Midwest, a similar house can be had for just over $100,000. But you knew that already. It's no secret that homes in ritzy Beverly Hills cost 10 times more than comparable houses in the military community of Killeen, Tex. The question is: How much do you really need to pay for the lifestyle you want? It might be less than you originally thought. Beverly Hills is the most expensive housing market in the nation for the second year in a row, with the average price of a home sold through July, 2007, at $2.21 million. In Killeen—the most affordable market in the U.S., according to the HPCI study—a similar mortgage sells for $136,725.

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Freddie CEO Says 40%-45% Chance of Recession

September 28 2007 CNBC.com The chief executive of Freddie Mac warned that the U.S. economy faces a 40 percent to 45 percent risk of recession induced by the housing market downturn, the Financial Times reported on its Web site. Richard Syron said the credit squeeze had left some parts of the U.S. housing market "literally frozen," the article said. Syron forecast the Federal Reserve would make another "material" cut in interest rates, the report said. According to the report, Syron also predicted that Congress would lift restraints on the operations of Freddie Mac and its sister mortgage company, Fannie Mae. Syron said the $417,000 ceiling on the size of home loans they can buy was likely to be raised to help support the U.S. mortgage market, the article said.

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Credit Markets Ease as Fed May Cut Rates More

September 27 2007 CNBC.com Credit market conditions eased Wednesday, not from any big improvement in underlying conditions but because the U.S. Federal Reserve is expected to throw moral hazard concerns to the wind and cut rates again in October. The world's top central bankers, including Fed Chairman Ben Bernanke, have repeatedly warned that they will not bail out feckless investors by cutting official rates to prop up markets but financial markets are pinning their hopes on just that. Demand for safe haven assets such as U.S. Treasury bonds was lower, equities were higher and gauges of risk appetite such as European credit spreads showed investors were more willing to take a chance. A growing trickle of borrowers were willing to launch bonds but the mood was at best cautious.

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Fed cut has had opposite effect on long-term mortgages

September 26 2007 MarketWatch.com Greg McBride, senior financial analyst for BankRate.com, says that many would-be home buyers are about to be stripped of a misperception, namely the idea that when the Federal Reserve Board is cutting interest rates mortgage rates will fall as a result. In a radio interview with Chuck Jaffe, MarketWatch senior columnist, McBride noted that the Fed is combating the economy, but some observers worry that its bigger-than-expected move might be opening the door to inflation, a concern which has pushed mortgage rates up slightly since the Fed's most recent move. McBride noted that the Fed's rate cut is bad news for long-term savers, as rates on certificates of deposit maturing in two or more years have fallen, while short-term rates have remained steady. This erases any risk premium that a saver gets for tying up money for a longer stretch of time.

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Rating agencies in the hot seat for their role in the subprime mess

September 26 2007 Money.CNN.com Lawmakers will scrutinize the role firms played in subprime mortgage mess - what went wrong, and why? Since the subprime crisis erupted, plenty of blame has been pinned on the big credit rating agencies. Just what went wrong at these firms - and what can be done to stave off another disaster - will be the topic of hearings on Capitol Hill this week. Lawmakers are expected to grill executives from Moody's and Standard & Poor's, two of the biggest agencies, before the Senate Banking Committee on Wednesday. Securities and Exchange Chairman Christopher Cox is also scheduled to testify. The House Financial Services Committee will follow with a hearing on Thursday. Critics say the firms failed investors by blessing complex mortgage-backed bonds and other products in turn for big fees. The critics say the agencies were blinded by their close relationship with issuers and their eager pursuit of profits.

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House mulls aid plan for struggling homeowners through bankruptcy law changes

September 25 2007 BusinessWeek.com As Congress weighs remedies for a worsening mortgage crisis, a House panel plans to examine possible relief for struggling homeowners through bankruptcy law changes. At a hearing scheduled for 3 p.m. EDT Tuesday, a House Judiciary subcommittee, chaired by California Democrat Linda Sanchez, plans to debate legislation she proposed that would allow bankruptcy judges to modify the terms of some home loans. "Responsible lenders who made loans on reasonable terms have nothing to worry about in bankruptcy court, but predatory lenders will end up with the loans they should have made in the first place," Rep. Brad Miller, D-N.C., who is sponsoring the bill with Sanchez, said last week.

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Credit Crunch to Hit Hardest in 2008

September 24 2007 CNBC.com Most of the impact of the global credit crunch will be felt in 2008 and the United States will be hardest hit, International Monetary Fund Managing Director Rodrigo Rato said on Monday. World economic growth should remain high next year but looks set to be below the levels of 2006 and 2007 and downside risks increase the longer financial markets remain in crisis, Rato told a seminar in Madrid. "Credit markets are correcting, but slowly, we aren't at a stage of normality," Rato said, adding that most countries should be able to cope with the financial conditions. "It has an effect on the real economy which will be felt more in 2008, with greater intensity in the United States, less in other areas," he said. Rato saw no quick fix for the global credit crunch triggered by defaults on U.S. subprime home loans to borrowers with poor credit histories.

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Mortgage defaults are stabilizing

September 24 2007 Money.CNN.com The default rate on U.S. mortgages is stabilizing, an American housing official said Monday, adding she didn't expect last week's cut in U.S. interest rates to significantly affect the number of defaults. Speaking on the sidelines of a forum in Singapore, Housing and Urban Development Assistant Secretary Darlene Williams said the Federal Reserve's bigger-than-expected half-point cut of its key rate last week signaled that authorities were taking action to support the economy. The concern has been that certain sections of the credit markets have frozen up as banks and investors have grown fearful about getting repaid because of the surge in defaults on mortgage loans, especially subprime loans made to borrowers with poor credit.

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Surprise: 'Toxic' Mortgages Are the Best for Rational Borrowers

September 23 2007 BusinessWeek.com A new study from professors at Columbia and NYU finds that the "optimal" mortgage in a perfect world is an option ARM. If you had to name the most toxic, dangerous, foolhardy kind of mortgage loan that exists, you'd very likely pick a pay-option ARM, which lets borrowers get deeper into debt by paying less than the minimum interest they owe each month and adding the unpaid interest to the loan principal. The loans have a very high penalty for prepayment so borrowers can't get out of it easily once they're in it. According to a new study by professors from Columbia and New York universities, the "optimal" mortgage in a perfect world is precisely that kind of loan—an adjustable-rate mortgage with an option for negative amortization and a ban (or at least severe restriction) on prepayment. In the real world that we are condemned to inhabit, many people who took out option ARMs foolishly believed that they would never have to pay more than the bare minimum monthly payment. At some point they have hit (or soon will hit) a ceiling on total permissible mortgage debt, at which point the terms change and their monthly payments soar to unaffordable levels. Next step: default and foreclosure.

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Subprime Crisis & Solution

September 20 2007 CNBC.com The Fed discusses the credit crunch and the economy

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Remedying the nation's subprime mortgage crisis

September 20 2007 Money.CNN.com Treasury boss Paulson and Fed chief Bernanke tell House panel what they are doing on mortgage crisis and express concern over some proposals: • Make more money available for mortgages to ease the credit crunch • Give borrowers greater protection from predatory lenders • Encourage homeowners to call their bank. Those are just a few of the proposed remedies being debated in Washington for remedying the nation's subprime mortgage crisis. At a House Financial Services Committee hearing Thursday, Treasury Secretary Henry Paulson told lawmakers they should send troubled homeowners one simple but urgent message: "Call your lender or mortgage counselor today." He noted that 50 percent of foreclosures occur without borrowers ever talking to their lenders, and said that he has gotten reports that lenders have tried to reach distressed borrowers to work out more affordable loan terms. "Yet those calls rarely get returned," he said.

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Bernanke's Speech on Subprime Lending

September 20 2007 Best-Mortgage-Companies.com Full transcript of the speech made by Federal Reserve Chairman Ben Bernanke on Sept. 20, 2007, before the U.S. House of Representatives' Committee on Financial Services, on the subject of subprime mortgage lending and mitigating foreclosures.

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Mortgage Applications Up as Refinancing Picks Up

September 19 2007 CNBC.com Applications for U.S. home mortgages climbed for a third straight week as more borrowers sought to refinance loans on which payments may be about to rise, an industry group said Wednesday. The increase was led by the seasonally adjusted index of applications for home refinancings, which jumped 4.6 percent to 1,962, the highest level since May 18, the MBA said. The MBA gauge for home purchase applications edged 0.9 percent higher to 452.0 last week, it said. The indexes underscore a growing urgency of homeowners with 5 million adjustable-rate mortgages slated to reset at higher rates over the next 18 months. Concern that resets will boost delinquencies and foreclosures has risen as lenders eliminate programs that once accepted riskier borrowers, and increase requirements for consumers with good credit.

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Paulson: Boosting the stretched mortgage market

September 19 2007 Money.CNN.com Shifting course, Treasury Secretary Henry Paulson planned to tell Congress that the Bush administration would consider allowing the big mortgage companies Fannie Mae and Freddie Mac to temporarily buy, bundle and sell as securities loans exceeding $417,000. This change, which the Bush administration opposed in the summer, is portrayed as a way to inject liquidity into the stretched mortgage market. Paulson said the change involving jumbo loans could occur only in tandem with tighter oversight of the two government-sponsored mortgage companies, according to a person familiar with the secretary's testimony prepared for a House hearing Thursday.

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Will Fed rate cut provide base for builders?

September 19 2007 MarketWatch.com Although Tuesday's Federal Reserve rate cut may soothe the market's psyche, it will have little impact on the main problems in the housing market, such as the inventory glut, falling home prices, a difficult mortgage market and rising foreclosures, according to a Morgan Stanley analyst. "While the Fed rate cut will likely help some homeowners with adjustable-rate mortgages that are about to reset, we believe it will have little overall impact on housing fundamentals," wrote Robert Stevenson in a report to clients Wednesday. He said he remains cautious on home-builder stocks "and would look to short the group should it trade meaningfully higher in the absence of further rate cuts."

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Countrywide's bank deposits recover, CEO says

September 18 2007 MarketWatch.com Countrywide Financial Corp.'s bank deposits have recovered recently after the company averted a run on a business that's become crucial to its planned recovery, Chief Executive Angelo Mozilo said on Tuesday. Mozilo said the lender is now out of the subprime mortgage business and added that he's "very bullish" on the future, while praising the Federal Reserve's decision to cut interest rates by half a percentage point to 4.75%. Countrywide , the largest mortgage lender in the U.S., has been hit hard by problems in the subprime home loan business, which have spread across the broader credit market. The company struggled to borrow money in the commercial paper and secondary mortgage markets, sparking concerns about its ability to survive.

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House votes to aid struggling homeowners

September 18 2007 BusinessWeek.com The House on Tuesday approved a plan to expand federal backing of mortgages in hopes of helping struggling homeowners avoid foreclosure. Despite some White House objections, the Bush administration and House Democrats took conciliatory stances pointing toward resolving their differences. The bill passed the House 348-72. It would allow the Federal Housing Administration, which insures mortgages for low- and middle-income borrowers, to back refinanced loans for tens of thousands of borrowers who are delinquent on payments because their mortgages are resetting to sharply higher rates from low initial "teaser" levels.

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Fed cut could buoy housing markets

September 18 2007Money.CNN.com The Federal Reserve's aggressive half-point cut Tuesday could provide support for a slumping housing market. A quarter-point drop had already been priced into the market for Treasury bills and other instruments tied to mortgage rates, according to Richard DeKaser, chief economist for National City Corp. The deeper cut means mortgage rates may have a little more room to fall, giving support to prices. The Fed Funds rate affects a range of consumer loans, including home equity and mortgages. lower mortgage rates would add to the number of home buyers able to afford to make purchases, increasing demand for properties and buoying home prices.

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Federal Reserve Chairman's Dilemma

September 17 2007 BusinessWeek.com Housing is in the pits. The credit markets are in turmoil. With the loss of 4,000 jobs in August, the labor market has slowed to a crawl. And Wall Street is clamoring for Fed Chairman Ben S. Bernanke to cut interest rates aggressively to pump up the economy. But investors, homeowners, and workers may be disappointed if they are hoping for more than one, or perhaps two, small cuts in the benchmark federal funds rate. In his defining moment as Fed chief, Bernanke is picking his way through an immensely complicated and uncharted economic landscape. Unless the bottom suddenly falls out of the job market or some other economic calamity unfolds, he's likely to show great restraint in the coming months.

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National City sees $160M loss on mortgages

September 17 2007 Money.CNN.com Regional bank National City Corp. said Monday after-tax losses for its mortgage banking division are likely to be close to $160 million in the third quarter. National City had originally projected losses between $130 million and $160 million for the quarter, but said in a regulatory filing the losses are expected to be at the high end of the range. National City said it expects to write down the value of "Alt-A" and home equity loans held for sale as the investor market for those loans has dried up. Alt-A loans are loans given to customers with minor credit problems or who do not have the documentation to qualify for a traditional prime loan.

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U.S. Fed Says Minorities Denied Home Loans More Often

September 16 2007 Bloomberg.com Minority borrowers received higher- cost mortgages than whites more frequently when they refinanced their homes last year, continuing a trend of racial disparities in home loan rates, the Federal Reserve said. Blacks received high-cost loans 52.8 percent of the time when they refinanced home loanslast year, versus 49.3 percent in 2005, the Fed said in a report released today. Hispanic borrowers received high-cost refinancings 37.7 percent of the time, up from 33.8 percent in 2005. The rate for white borrowers was 25.7 percent last year, compared with 21 percent in 2005. The report's release coincides with increased scrutiny in Congress of lending practices that contributed to the collapse of the subprime-mortgage market and prompted credit-market volatility in recent weeks.

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Trapped by the mortgage meltdown

September 16 2007 Money.CNN.com Tighter lending standards have put many home sellers, owners and buyers in a bind. Whether you're a home seller, owner or buyer, by this point you've got to be feeling a little rattled. The bad news about the housing market seems never ending: Foreclosures have more than doubled over the past year. Sales of existing homes are off 11 percent from this time last year. At that rate, it will take at least nine months to work off the inventory of unsold homes. And median home prices in July (the most recent figure available) dropped for the 12th month in a row. Worse yet, all that happened before problems in subprime lending expanded throughout the mortgage market and beyond, creating what's popularly being referred to as the credit crunch. While it's too soon to see the impact reflected in the numbers, the immediate future is clear: As lenders tighten their borrowing standards, fewer people will qualify for mortgages.

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Paulson: Turmoil to Persist But Economy Strong

September 16 2007 CNBC.com Treasury Secretary Henry Paulson said on Friday that it will take time to work through the problems contributing to current financial market turmoil but expressed confidence U.S. growth will not be derailed. "I feel very confident that this economy is going to continue to grow," Paulson said in an interview with CNBC. "Inflation is contained and that is obviously the key to extending an economic expansion."

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Why the credit crunch may deepen

September 14 2007 Money.CNN.com With the $2 trillion commercial paper market locked up, it's harder for banks to lend money. Stock markets have regained some of their poise on rising hopes that the Federal Reserve will cut interest rates on Tuesday. But investors appear to be looking past one key warning sign: The $2 trillion market for commercial paper remains locked up - suggesting there could be more pain ahead for borrowers around the world. The ongoing contraction in buying and selling commercial paper, a form of debt that financial institutions and companies rely on to raise money for short periods, is likely to keep pushing credit spreads wider and, in turn, pressure borrowers.

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Banks borrowing more from Fed

September 14 2007 Money.CNN.com Banks increased their borrowing from the Federal Reserve this week, pushing the one-day level to the highest point since the day following the 2001 terrorist attacks. The Fed reported Thursday that direct borrowing by commercial banks from the Fed totaled $7.15 billion in primary credit on Wednesday. That was the highest one-day total since the Fed loaned $45.5 billion on Sept. 12, 2001, the day following the terrorist attacks on New York and Washington. The daily average borrowing from the Fed for the week ending Wednesday totaled $2.93 billion, an increase of $1.83 billion from the average for the previous week.

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Bernanke to Testify Next Week On Mortgage Crunch

September 13 2007 CNBC.com Federal Reserve Chairman Ben Bernanke is scheduled to testify before the House Financial Services Committee on Sept. 20, a spokesman for the panel said. The spokesman said the hearing, which has yet to be officially announced, will cover mortgage-related topics. A time for the hearing has yet to be announced. The spokesman, Steve Adamske, said the hearing would examine steps President Bush proposed in late August intended to help homeowners avoid defaulting on mortgages. The hearing follows by two days a Fed policy-setting meeting at which the central bank is widely expected to lower benchmark U.S. interest rates by at least a quarter-percentage point.

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How to Qualify for Government's Subprime Bailout

September 13 2007 PersonalFinanceBlog.com In a little noticed press release, the Bush administration announced its plan to create a new refinancing program managed by Federal Housing Administration (FHA) that will likely rescue 240,000 homeowners from the fate of foreclosure. The new product, named FHASecure, does have some strict eligibility criteria, though. Homeowners must meet all five of the following condition to be eligible for an FHA bailout: • A history of on-timemortgage payments before the borrower's teaser rates expired and loans reset; • Interest rates must have or will reset between June 2005 and December 2009; • Three percent cash or equity in the home; • A sustained history of employment and • Sufficient income to make the mortgage payment.

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Countrywide loan biz hits big slowdown

September 13 2007 Money.CNN.com Countrywide Financial Corp. said Thursday it lent less money during August as a protracted housing slump kept prospective home buyers out of the market. The nation's biggest mortgage lender issued $34 billion in home loans last month, a 17 percent decline from the same period in 2006. The company processed $2.3 billion in loan applications a day, marking a decline of 12 percent. Countrywide said the decline reflects current conditions in the mortgage industry, which include slipping home values and decaying credit quality. Loans in the pipeline at the end of August shrank to $52 billion from $64 billion at the end of August 2006.

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Rates on 30-year mortgages drop sharply

September 13 2007 BusinessWeek.com Rates on 30-year mortgages dropped this week to the lowest point in four months, providing some relief for people hoping to refinance their existing mortgages. Freddie Mac, the mortgage company, reported Thursday that 30-year, fixed-rate mortgages averaged 6.31 percent this week, the lowest level since May 17, when 30-year mortgages averaged 6.21 percent. The rate had been 6.46 percent last week. All mortgage products surveyed by Freddie Mac showed declines this week. Frank Nothaft, the company's chief economist, said this should provide help to homeowners who are hoping to refinance existing adjustable rate loans that are resetting from low introductory "teaser" rates.

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Paulson Asks Lenders to Help Homeowners

September 12 2007 CNBC.com U.S. Treasury Secretary Henry Paulson said on Wednesday a recovery in the subprime mortgage market will be slowed by a wave of interest rate resets and urged lenders to help troubled borrowers. Speaking to mortgage servicing executives at the Treasury, Paulson called on lenders to expand the range of mortgage products to refinance loans made unaffordable by resets. "Unlike periods of financial turbulence I've witnessed over many years, this turbulence wasn't precipitated by problems in the real economy. This came about as a result of some bad lending practices," Paulson said. He urged the mortgage executives, which included embattled Countrywide Financial Chairman Angelo Mozilo and top managers from Wells Fargo, CitiMortgage, HSBC and JP Morgan Chase, to identify and offer refinancing and other assistance to troubled borrowers facing big rate resets.

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Countrywide workers sue over retirement plan

September 12 2007 Money.CNN.com Some Countrywide Financial Corp. employees sued the mortgage lender Wednesday, claiming they suffered heavy losses in their 401k retirement accounts after the company failed to warn them about the depth of its financial troubles. The lawsuit, filed in U.S. District Court in Santa Ana, seeks class-action status and names as defendants Countrywide Chairman and Chief Executive Angelo Mozilo and benefits committee members in charge of the retirement plan, according to attorney Steve Berman, who is representing the plaintiffs. He said employees decided how much of their salary to set aside in their retirement plan based in large part on their understanding of the company's financial health.

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Subprime contagion fueled by derivatives

September 10 2007 MarketWatch.com Complex derivatives, such as mortgage-backed securities and collateralized debt obligations, have probably helped subprime problems spread across much of the financial sector, possibly affecting economic activity, Federal Reserve official Janet Yellen said on Monday. Mortgage-backed securities (MBS) are packages of home loans that are sliced up into different bits and sold to institutional investors. Collateralized debt obligations repackage MBS and other asset-backed securities into yet more securities for sale. These relatively new derivatives and other financial innovations helped fuel the housing boom. They were hailed as beneficial instruments because they encouraged the wider spread of risk among a more diverse set of investors. Other examples include collateralized loan obligations and credit default swaps. By spreading and diversifying risks, instruments like MBS and CDOs may have increased the chances that disruptions in small parts of the financial world have a broader impact.

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Wachovia is grabbing more mortgage business as a result of the recent shakeout

September 10 2007 Money.CNN.com CEO G. Kennedy Thompson says that industry shakeout is leading to a much higher origination volume for the bank. Five of the top 40 mortgage lenders, responsible for more than 9 percent of last year's mortgage production, have gone out of business, according to Thompson. Other major mortgage companies, such as Washington Mutual and Countrywide have scaled back their operations. By contrast, Charlotte, N.C.-based Wachovia, which last year dramatically expanded its mortgage business by acquiring Golden West Financial, has been expanding. In the first two months of the third quarter, the company's outstanding mortgage loans have shot up about $1.2 billion, said Thompson, who was speaking at a financial-services conference.

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For Bankers, Yet Another Credit Migraine

September 10 2007 BusinessWeek.com Citigroup leads the banks at risk as demand dries up for a $400 billion market for off-balance-sheet investments. The credit crunch has big banks in a bind. Not only are they holding billions of dollars in buyout-related debt they may be unable to sell, but large hedge funds run by players such as Goldman Sachs (GS) and Bear Stearns (BSC) have been burned by bad bets on subprime mortgages. But wait, there's more bad news: Fears are mounting the banks may next be whacked by their Structured Investment Vehicles (SIVs), a relatively obscure market that has ceased functioning in recent weeks. Few outside the financial community know about it, but that could change quickly.

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Housing woes hit title insurers

September 9 2007 Money.CNN.com Title insurers report a spike in the number of claims, slowdown in new business; possible sign of more pain to come, according to a new report. Title insurance policies essentially protects lenders and homebuyers against challenges to a property's ownership and, according to the Journal, are often seen as a wider measure of the health of the housing market than foreclosures. Homeowners can file claims, but so too can subcontractors that file liens when work on a house goes unpaid.

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Light at the End of the Subprime Tunnel

September 7 2007 BusinessWeek.com The Mortgage Bankers Assn.'s new numbers are grim, but the group's chief economist says a recovery, though delayed, is in sight. The increase in foreclosures was concentrated in just four states: California, Florida, Nevada, and Arizona. Those states had big shares of adjustable-rate mortgages, high prices, and lots of home purchases by speculators. "The recent turmoil is likely to postpone the eventual turnaround of the market by about one quarter", says Douglas Duncan, the Mortgage Bankers Assn. chief economist. He now thinks the delinquency rate will peak some time between the end of 2007 and the middle of 2008, with the foreclosure rate peaking one to two quarters after that.

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Housing Harming Broader Economy?

September 7 2007 Bloomberg.com Federal Reserve Bank of Atlanta President Dennis Lockhart said he hasn't seen conclusive signs that the U.S. housing recession has harmed the wider economy and warned that inflation has yet to be contained. "So far, I have not seen hard or soft data that provide conclusive signs that housing problems are spilling over into the broad economy,'' Lockhart said in his first speech on the economic outlook since taking office in March. He cited "real- time information'' from regional business contacts.

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The Mortgage Lenders' Dual Masters

September 6 2007 Fool.com Call it a convergence of reality and desperation. Earlier this week, the Federal Reserve, along with the nation's banking regulators, issued special guidance asking those companies that service mortgage loans to work with homeowners who risk foreclosure on their homes. According to the Mortgage Bankers Association, the number of mortgage holders just beginning the foreclosure process in the June quarter hit 0.65%, the third straight quarter that the rate has moved upward. Beyond that, the portion of holders who have gotten behind in their payments but haven't yet been pushed into foreclosure proceedings moved up nearly 75 basis points year over year to 5.12%.

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Congress urges Bush action for homeowners

September 5 2007 Money.CNN.com Democrats say concrete action is needed through new legislation; turmoil from a surge in mortgage defaults expected to be muted by solid economic growth. Congressional Democrats promoting legislative solutions to the mortgage market crisis said Wednesday that a Bush administration plan doesn't go far enough to protect homeowners who face huge increases in their monthly payments when rates on their adjustable mortgages jump in the months ahead. A top administration official said the full impact on the economy of the turbulence in financial and mortgage markets has yet to play out.

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Dodd mortgage bill will barn lending practices now harming consumers

September 5 2007 MarketWach.com Senate Banking Committee Chairman Christopher Dodd, D-Conn., said Wednesday he will introduce a bill aimed at protecting homeowners, particularly in the hard-hit subprime mortgage market. The bill would ban prepayment penalties, prohibit "steering" of customers to higher-priced loansand take other steps. "My bill will help keep Americans in their homes while also helping to restore public confidence in our mortgage and capital markets," said Dodd, who is running for president.

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Countrywide job cuts deepen

September 5 2007 Money.CNN.com The troubled mortgage lender said it will hand out 900 more pink slips as defaults and foreclosures mount, particularly among low-income homeowners. Struggling mortgage lender Countrywide Financial said Wednesday it will cut about 900 more jobs nationwide, primarily from its mortgage production divisions. The cuts followed the elimination of about 500 positions last month. The latest layoffs came in response to the troubled housing market and economic conditions, Calabasas-based Countrywide (Charts, Fortune 500) said in a statement.

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Mortgage Servicers Urged to Head Off Foreclosures

September 4 2007 CNBC.com U.S. banking regulators Tuesday urged mortgage servicers to be proactive and contact borrowers at risk of default to help them avoid foreclosure and keep their homes. The regulators, headed by the Federal Reserve, said mortgage servicers should try to help troubled borrowers who face drastically higher payments refinance into fixed-rate loans and take other steps to make the mortgages sustainable. "We encourage servicers of securitized mortgages to reach out to financially stressed homeowners," Fed Gov. Randall Kroszner said in a statement. "Keeping families in their homes is matter of great importance to the Federal Reserve."

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Mortgage Applications

September 5 2007BusinessWeek.com Investors today will get an update on home loan applications as the mortgage industry's turmoil continues and the housing market continues to show weakness. The Mortgage Bankers Association is due to report its weekly index of home loan application volume at 7 a.m. EDT. Increasingly, mortgages have gone delinquent and into default this year, especially among so-called subprime borrowers with weak credit.

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Shares of most mortgage lenders rise

September 4 2007 Money.CNN.com Shares of most mortgage lenders rose Tuesday as a major lender raised cash through two deals and another lender drew a revised takeover offer from a suitor. Accredited Home draws takeover offer but fights for higher price; Thornburg Mortgage closes two deals allowing it to resume financing home loans. Accredited Home Lenders Holding Co.'s (up $0.64 to $9.69, Charts) shares surged 7.2 percent on the Nasdaq Tuesday. Lone Star Fund V, an investment fund, cut its offer to buy the San Diego-based lender to $8.50 per share from $15.10 per share. The company's shares have long treated the deal skeptically, trading below $4 even after the deal was announced.

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Bush offers help to troubled homeowners

August 30 2007 CNNMoney.com The President offers aid to subprime borrowers through government programs and new legislation. President Bush outlined his plan Friday for helping troubled subprime borrowers keep their homes. The initiatives target hundreds of thousands of distressed homeowners. Speaking in the Rose Garden, the president, after highlighting some of the recent stronger economic trends, pointed out the weaknesses in the mortgage market as an area of concern, particularly in the subprime sector. Although he labeled the problem "modest in the overall scheme of things," he said, "It's anything but modest if you're one of the families affected.

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Speculators Make Up Bulk of Mortgage Defaults

August 31 2007 CNBC.com People who bought houses as an investment rather than to live in them make up an important proportion of mortgage defaults, a survey showed on Friday, casting a clearer light on the role of investors in the current credit crisis. The survey by the Mortgage Bankers Association (MBA) quoted by the Wall Street Journal found that in Arizona, California, Florida and Nevada, between 21% and 32% of defaults on prime-quality home loans were by people who did not occupy the properties. Overdue payments are piling up in the four states, and defaults were high on both prime and subprime loans, the WSJ said.

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