Mortage Industry is Crumbling - Who do you run to?

Subprime lenders were particularly susceptible to the change in the housing market, because they dealt with borrowers who often stretched financially to buy homes; more than half, for instance, took out adjustable mortgages. Many subprime lenders were not obligated to follow the tougher regulations that apply to commercial banks.

The meltdown among lenders that specialize in home loans to people with weak credit, known in the industry as subprime lenders, again ravaged stock prices. Financial institutions from Britain's HSBC Holdings PLC to subprime leader Countrywide Financial Corp. sank amid reports of strained portfolios as loans went bad.

The latest to rattle the markets was New Century Financial Corp., the nation's second-largest subprime lender. The Irvine, Calif.-based company disclosed a criminal probe into the trading of its securities, and into the lender's accounting procedures.
Already beleaguered investors were swift to react. New Century's shares lost 60 percent on Monday - wiping $532 million from its market value. Wall Street, still wobbly after last week's huge plunge, also punished the rest of an industry blamed for loosening their lending standards amid an eroding housing market.

"We see increasing evidence that this industry is now in a downward spiral whereby each negative development fuels additional deterioration in key fundamentals including origination volume, pricing, credit and most importantly funding," Stifel Nicolaus analyst Christopher Brendler said.

Like WHOA!!! What do you do??? Not to worry but continue working on your credit and have a good down payment. The days will end where a person can have 100% financing. This is an advantage in the long run and will prevent foreclosures.