Group Calls for Low-Income Homeowner Aid

With concern building over troubles in the mortgage industry, a liberal think tank on Monday said the federal government should take new steps to protect low-income homeowners at risk of foreclosing. The Center for American Progress said the government should consider grants to expand mortgage aid and foreclosure prevention programs for families falling behind on their monthly payments.The Center for American Progress' report said low-income and middle-class homeowners have been hurt by the growth of adjustable-rate mortgages with low introductory "teaser" rates that expire in two or three years. The report also highlighted homeowners' assistance programs in Pennsylvania, Massachusetts, North Carolina, Minneapolis and Brooklyn, NY., as models of ways to aid people in danger of losing their homes.

The report said the federal government should provide a $25 million grant to expand these kinds of programs in parts of the country dealing with high foreclosure rates -- such as places in Ohio, Iowa and the Atlanta area. -- Associated Press

On Bankruptcy's Doorstep

New Century Financial Corp., the nation's second-biggest subprime mortgage lender, said it doesn't have the cash to pay creditors who are demanding their money, increasing speculation that the company will go bankrupt. The New York Stock Exchange, citing the credit crisis, halted trading of New Century on Monday until it decides whether to keep listing the company's securities. Shares of the Irvine, Calif.-based company, already down 90 percent in 2007, lost half their remaining value in premarket trading, and rivals fell as much as 25 percent Monday.

"They're one step closer to bankruptcy," said Bose George, an analyst at Keefe Bruyette & Woods. "The only possibility for survival now is for someone, potentially an investment bank, to step in." New Century may be insolvent because too many of its own customers -- most of whom have poor credit histories or heavy debt burdens -- aren't repaying their loans. New Century said in a federal filing it doesn't have funds to repay lenders including Charlotte's Bank of America Corp., Morgan Stanley, Citigroup Inc. and Goldman Sachs Group Inc. The creditors want New Century to repurchase all outstanding mortgage loans they financed.