| Mortgage Fears Drive Up Rates On Jumbo Loans
Turmoil in the U.S. home-mortgage market is starting to pinch even buyers of high-end homes with good credit records, in the latest sign of rising anxiety among lenders and investors. This surge in rates on so-called jumbo loans is particularly notable because rates on 10-year Treasury bonds have been falling. Normally, mortgage rates move in tandem with Treasurys, but market jitters have caused investors to ditch mortgage securities. Meanwhile, American Home Mortgage Investment Corp. finally succumbed yesterday to the mortgage-sector chaos that had crippled it in recent weeks and filed for protection from creditors under Chapter 11 of U.S. bankruptcy ... .
Bank emperor's biggest gamble
CHARLOTTE, N.C. - In a career defined by blockbuster deals, Bank of America chief executive Kenneth D. Lewis has taken his biggest gamble yet with an attempt to rescue the country's biggest mortgage lender, Countrywide Financial.
Lewis may have become a market savior by buying the troubled Countrywide for about $4 billion in stock, and keeping the industry and regulators from the messy task of cleaning up the bankruptcy of a company that is servicing 9 million U.S. home loans with a value of $1.5 trillion.
But Bank of America must first take on billions in mortgages at a time when the nation is facing an ever-widening credit crisis, foreclosures are on the rise and the odds of a recession seem to grow each day.
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Change in bankruptcy laws pondered amid home mortgage meltdown
WASHINGTON | After being hooked with ill-advised subprime loans on their homes, many thousands of Americans could end up gaffed in bankruptcy courts next year. Despite a new law to make filings more painful, bankruptcies surged by nearly 40 percent in 2007, leading Samuel Gerdano, American Bankruptcy Institute director, to predict "even higher filings this year, as the heavy consumer debt load is made worse by the home mortgage crisis." Some in Congress want to wade in to try to help prevent more — perhaps as many as 2.2 million — homes from being lost to foreclosure. Nearly 20,000 Missourians risk losing homes, said Sen. Claire McCaskill, a Missouri Democrat. Sen. Chris Dodd would roll back provisions in the law enacted two years ago to make it harder for people to file for bankruptcy and walk away from their debts.
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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Bank of America to buy struggling mortgage provider
Bank of America announced yesterday that it is buying Countrywide Financial Corp., the largest mortgage broker in the United States, in an all-stock transaction worth about US$4 billion. The takeover by the largest US consumer bank could help save the California-based company from bankruptcy, but possible impact on jobs was not immediately detailed, observers said. A statement from Bank of America's headquarters in Charlotte, North Carolina, said the acquisition will make it the nation's largest mortgage lender and loan service provider. Countrywide, the subject of widespread talk about possible impending bankruptcy in recent days, "will benefit from the stability of being part of the largest and one of the most financially strong financial institutions in the United States," the bank said in the statement.
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