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High-Risk Customers Breaking Mortgage Lenders
customers with shaky finances, exotic mortgage terms, rising interest rates and stagnant housing prices, but they say a continued decline could endanger the financing that gives the industry its lifeblood.
"This business is losing money at the industry level today, and that will lead to capital being pulled away from this business," said Merrill Lynch analyst Kenneth Bruce.
NovaStar Financial Inc. last week surprised many in the industry, reporting a $14 million fourth-quarter loss, setting aside $45 million for delinquent loans and saying it may not have taxable earnings for the next five years.
The Kansas City-based company's news came a week after two other major subprime lenders, HSBC Holdings PLC and New Century Financial Inc., also reported financial problems brought on as customers have fallen 30 days or more behind on their mortgage payments.