Financial crisis homegrown

From the LA Times:

Lenders post more loan ills

IndyMac and Countrywide report higher delinquencies.

From Times Wire Services

March 4, 2008

Shares of Pasadena-based IndyMac Bancorp tumbled 20% on Monday after the mortgage bank reported higher delinquencies in January and a sharp drop in loan production compared to a year earlier.

In other bad mortgage news, Calabasas-based leader Countrywide Financial Corp. reported a surge in delinquencies on risky loans known as pay-option adjustable rate mortgages, or option ARMs.

http://www.latimes.com/business/la-fi-lenders4mar04,1,3326257.story?ctrack=1&cset=true

Bank of America is going ahead with acquiring Countrywide. IndyMac laid off a lot of people recently and says the recent loss isn’t unexpected.

Seems to me this indicates our local economy could continue experiencing the fallout for a long time to come.

Times also reports that the Fed’s Bernanke is urging banks go past forgiving delinquencies to writing down principal on loans facing foreclosure.

Bernanke urges banks to forgive portions of mortgages

By Peter Gosselin, Los Angeles Times Staff Writer
2:47 PM PST, March 4, 2008

WASHINGTON — Federal Reserve Chairman Ben S. Bernanke said today that the nation’s banks must be ready to go beyond stretching out interest payments or trimming rates and write down the principal of some troubled mortgages in order to avoid widespread foreclosures and break the steep dive in housing prices.http://www.latimes.com/business/la-fi-bernanke5mar05,1,4499038.story?ctrack=2&cset=true

I can sympathize with Bernanke’s dilemma, and agree something needs to be done to slow the foreclosure rates, but I’m a taxpayer who’s making my house payments on time and nobody’s talking about writing down my principal.
Paul