Mortgage Lenders Take Big Loss
CBS
Transcript
[Music] New Century the country's second biggest subprime mortgage lender was teetering on the brink of bankruptcy today the victim of a mortgage delinquency crisis that threatens to infect the entire economy El nearly 8% of borrowers in the subprime category those are the higher risk loans to often lower income borrowers have fallen 3 months behind in their payments or face foreclosure but many borrowers are also starting to fall behind in the better loan categories how significant do you think the risk is that it could spread to that level I think it's very significant I think it's actually quite likely industry analyst Josh Rosner says we haven't seen the worst yet no I think that actually there's a lot of risk still out there in Iowa where foreclosures soared 64% last year attorney general Tom Miller's calling for tougher standards for lenders they shouldn't be taking loans that have these risky unfair Provisions um not only are they unfair they're un unwise and unsafe lenders are already clamping down on credit Morticia Patterson and Dexter Skelton had an approved loan to buy their New Jersey Dreamhouse but then New Century rescinded the mortgage offer you know we were so excited we thought we would be going into a better life a new home you know was disheartening tighter credit Will mean fewer buyers and foreclosures will dump more houses on the already glutted Market putting downward pressure on prices all this leads to well all of this leads to potentially a housing Le recession in a worst case scenario and it's it's absolutely possible it's too early to say if it's likely or probable but at the very least Jos Josh Rosner says the housing market has another 12 to 36 months of difficult times ahead
Dow plunges 243; foreclosures hit record, New Century collapses
CBS News
Transcript
[Music] investors will try and pick up the pieces after Tuesday's stock market breakdown a weaker than expected retail sales report and a further meltdown in the mortgage Market had investors heading for the exits the Dow plummeted nearly 243 points the NASDAQ plunged about 52 part of the problem more and more Americans are having trouble making their mortgage payment the rate of homes entering foreclosure reach a record half a percent in the fourth quarter and the delinquency rate jumped to nearly 5% that rise was led by borrowers of high-risk subprime loans which saw a delinquency rate of over 133% meanwhile more troubles for subprime lender New Century which says it's run out of money it's being investigated by federal prosecutors for its accounting practices and the New York Stock Exchange has suspended trading and shares of the company and is moving to delist it investors fear this home Lending crisis will spread across the economy and could lead to a recession investors will also be keeping an eye on oil prices the government set to release the latest on US Stock piles crude prices fell nearly a dollar Tuesday despite a new forecast for a steep drop and oil supplies worldwide that's your money watch log on to cbsnews.com for more business headlines in New York I'm Alexis christopherus
Dow dips below 12,000 on subprime fears; GM profit $950M
CBS News
Transcript
[Music] a late day rally helped stocks erase an early loss that initial sell-off was triggered by new evidence of a meltdown in the subprime mortgage sector the Blue Chips briefly di below the 12,000 Mark for the first time since November shares of H&R Block slid as it became the latest to war of problems with subprime loans the nation's largest tax preparer says its Mortgage business increased its third quarter loss by nearly $30 million and at General Motors subprime loan losses at its former Financial unit pulled its fourth quarter earnings below analyst estimates the ailing automaker reporting a profit of $950 million closing another chapter in the hulet Packard pretexting case the California Attorney General's office has agreed to let former HP chairwoman Patricia Dunn and three others plead guilty to misdemeanor charges in a deal to avoid jail time another record for the Harry Potter series the newest offering from JK Rowling will have a record-breaking 12 million copies printed in the very first run according to publisher Scholastic the last Potter book sold nearly 7 million copies in just 24 hours Harry Potter and the Deathly Hallows hit store shelves July 21st and that's your money watch click on cbsnews.com for your latest business headlines at the New York Stock Exchange I'm Alexis christopherus