A Credit Crunch is Coming

Wall Street is loosing its appetite for sub-prime, no doc loans and other exotic types of mortgages. When the mortgage companies loose the ability to sell the riskier mortgages to investors, they will stop offering these types of loans to certain home buyers. It looks like sub-prime lenders are scaling back these knds of loans already.


["NEW YORK (AP) -- Some mortgage lenders are feeling the heat from Wall Street to tighten their lending standards and cut their exposure to riskier loans.

The force at work is the increasing demand from investment banks for lenders to buy back the loans due to borrowers' failure to make their first few payments on those loans. Such "early payment defaults" so far have largely been limited to nonprime mortgages made to borrowers who pay higher rates than those qualifying for standard loans due to their weak credit or inadequate documentation."]

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