Countrywide Financial CEO Angelo Mozilo estimates that 40 to 50 subprime
mortgage outfits are shutting down per day, and he expects these lenders to
continue to experience problems for the rest of the year. More subprime
lenders are going under at a time when Wall Street's tolerance for risky
investments, including interest-only, no-money-down and no-documentation
loans, has waned and when investment banks increasingly are sending bad
loans back to the originating lenders. About 13 percent of all subprime
loans in the United States were delinquent at the end of the third quarter,
according to the Mortgage Bankers Association. Subprime loans now account
for 13.6 percent of all U.S. home loans, the industry group estimates.
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