Re: Banks in America face huge problems , billions to be written off

yansimon52 wrote:
On Mar 11, 7:25 pm, Dalai Baru <d...@xxxxxxxxx> wrote:
Will this backlashes into another sharemarket selldown???

Don't worry too much lar......HSBC is the world's local
bank........they know the ground........where is the market, where is
the janbam.....LOL............LOL...

More important is they know when to look for janbam.

On 10 Mar 2007 17:21:29 -0800, "kangarooistan"



<kangaroois...@xxxxxxxxx> wrote:
American home-loan defaults spread to lower-risk borrowersTom Bawden
in New York
America's mortgage woes are spreading from home loans made to high-
risk borrowers to encompass medium-risk recipients too, with
potentially far-reaching consequences for US homeowners and their
lenders.
Problems with risky sub-prime mortgages have been a focus for lenders,
particularly HSBC, which is expected to write off about $11 billion
(?5.6 billion) - much of it relating to this area - when it reports
its annual results today.
However, lenders in the US face a new threat as defaults on the fast-
growing "Alt-A" mortgages, medium-risk policies that stand between sub-
prime and prime loans in the credit rankings, are also on the rise.
They have doubled to about 2 per cent in the past year, while 5 per
cent of the two million such mortgages issued in 2006 will eventually
end in foreclosure, according to David Liu, a mortgage analyst in
UBS.
Related Links
Low-income borrowers to feel the pinch in US
US home repossessions at highest level since 80s
HSBC, Europe's largest bank, is facing a crisis in its US sub-prime
business and this has triggered a cull in the division's senior
management. Rising bad debts forced HSBC to issue its first profit
warning in the run-up to its results announcement.
However, HSBC is also a lender in the "Alt-A", or near-prime market,
and while the bank played down the impact of its exposure in that
area, the spectre of deteriorating credit quality across more of the
US market is likely to be unsettling.
Federal regulators have become so concerned with the state of the sub-
prime market - in which a fifth of mortgages issued in 2005 and 2006
are expected to end in repossession - that they are preparing to clamp
down on home-loan providers' lending policies.
The value of new Alt-A mortgages issued reached $400 billion in 2006,
compared with just $85 billion in 2003, according to Inside Mortgage
Finance. Mr Liu said: "The issues with sub-prime mortgages are clearly
spreading and will cause particular problems for the investment banks
whose involvement in higher-risk loans has become increasingly
significant in recent years."
As well as lending mortgage providers' money to issue new home loans,
investment banks such as Goldman Sachs, Credit Suisse and Bear Stearns
often buy existing mortgages and package them as bonds backed by their
interest payments.
The banks could potentially make huge losses on the loans they have
made as well as the mortgage-backed bonds they have underwritten as
the number of defaults jumps.
--------------------
Wonder WHY ?
Check out the sad mess , with an aging workforce about to retire with
no funds in their PLASTIC economy , and a war they can NOT win
www.costofwar.com
Down hill all the way from here , NOTHING can save the American
economy from total meltdown
Bail out if you can
kanga
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