| ALL BUSINESS: Banks face more woes from rising delinquencies on second ...
Contrarian investors who think now is the time to start buying beaten-down banking stocks could be in for a shock if they don't carefully review those companies' distressed home-equity loan portfolios. Massive losses tied to subprime-mortgage investments knocked down bank earnings over the last year, spurring investors to flee those stocks. But that could be only the start: Rising delinquencies in home-equity loans and other second mortgages could keep the banks' results from improving anytime soon. In recent days, executives at Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co. said missed loan payments were a factor in their quarterly earnings declines. Most said the problem would only get worse. Why? A so-far small, but growing, number of homeowners who used their homes like an ATM to fund their spending and investment bets are finding themselves in a financial pinch.
How the failure of subprime mortgages hurts the overall economy
Given the huge piles of consumer and business debt out there, many U.S. residents seem to think easy credit is their birthright. That cozy feeling that a loan is always within reach is getting rudely shaken. An international credit crunch is upon us. The subprime mortgage crisis spawned it, but everything from home-equity loans to business lines of credit may be touched before it's over. Sectors as disparate as auto-parts suppliers and developers of riverfront condos in Detroit are feeling the pinch of tighter credit, battering an already weak Michigan economy. "The unwinding of debt is all encompassing. It's from the little homeowner out there to the big corporation," said Larry Moss, senior vice president for the Raymond James investment firm in Birmingham. .
Md. mortgage fee lawsuit reinstated
A ruling yesterday from the state's highest court over prepayment mortgage charges could make it more expensive for some to obtain home equity loans, the banking industry's trade association warned.
The Maryland Court of Appeals found that state-chartered Provident Bank assessed a "prepayment charge" that's not allowed under state law. The bank had waived $680 in closing costs on a $17,000 loan to Andrew Bednar in 2003 but collected the money after the loan was paid off early when he refinanced with another lender two years later.
The ruling overturns a decision by Baltimore Circuit Court to dismiss the lawsuit against Provident.
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