It was Charles Mackay, the 19th-century Scottish journalist, who observed that men go mad in herds but only come to their senses one by one.
We are only at the beginning of the financial world coming to its senses after the bursting of the biggest credit bubble the world has seen. Everyone seems to acknowledge now that there will be lots of mortgage foreclosures and that house prices will fall nationally for the first time since the Great Depression. Some lenders and hedge funds have failed, while some banks have taken painful write-offs and fired executives. There’s even a growing recognition that a recession is over the horizon.
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Credit reporting agency Equifax recently unveiled a new rating system that identifies credit seekers who may have an adjustable rate mortgage. The ARM Predictor is meant to minimize risks for lenders, but some consumer advocates worry that the system will hurt borrowers and lead to higher rates on loans and credit cards.
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Nov. 28 (Bloomberg) — The number of mortgage applications in the U.S. dropped last week, led by the biggest decline in refinancing this year.
The Mortgage Bankers Association’s index of applications to buy a home or refinance a loan decreased 4.3 percent to 652.5 from 681.7 the prior week. The group’s refinancing gauge slumped 15 percent, the most since December, while purchases rose.
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SAN FRANCISCO (AP) — Wells Fargo & Co. is absorbing $1.4 billion in losses on home equity loans that borrowers have stopped repaying amid a deepening real estate slump that’s turned into a financial sinkhole.
Until Wells Fargo disclosed its projected losses late Tuesday, the San Francisco-based bank had suffered relatively little damage in a mortgage meltdown that had already battered other major U.S. lenders.
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