Liquidity is Contracting

A few mortgage companies are strating to tighten their lending policies or are making an effort to limit the amount of loans that they originate. The bubble began with loose lending strategies on the part of banks and mortgage companies and it looks like the bubble may pop with tighter lending rules which will eventually cause liquidity to dry up. It can't happen fast enough for me.


WASHINGTON (AP) -- Federal Reserve Chairman Alan Greenspan is turning up the volume on his warnings about the potential perils of certain risky mortgages if the high-flying housing market loses significant altitude.

There are signs some companies are getting the message. A few have begun scaling back some types of those mortgages or making them less appealing by raising costs.

Continue...