And once you get through that first, excellent article, more empirical proof of the liquidity contraction (it won't be contained to subprime, either - that's a gross misnomer) that will act as an albatross on U.S. GDP and corporate earnings: Lenders back off riskier loans Mortgage options tighten back up now that market is shifting, raising the bar for consumer credit scores. Dave Collins / Associated Press HARTFORD, Conn. -- Homeowners with troubled credit histories are finding it harder to get mortgages or refinance homes because softening in the housing market is making lenders less likely to handle riskier loans. Several lenders of subprime mortgages -- used primarily for home equity loans and for people with spotty credit -- have shown signs of trouble after the housing bubble popped and more homeowners began defaulting high-interest mortgages. On Wednesday, shares of Kansas City, Mo.-based Novastar Financial Inc. plunged more than 42 percent to $10.10 per share after the subprime lender posted fourth-quarter losses of $14.4 million. Company officials set aside $45 million in anticipation of defaulting mortgages and said they were unsure Novastar would turn a profit in the next five years. The shifting market is prompting investors to demand higher standards for loan approvals. Loans for 100 percent of a property's value required a minimum credit score of 580 last year, but now require at least a 600 score, said David Zionts, owner of Connecticut Mortgage Lenders LLC. A high-value loan with no income verification could be had last year with a credit score of 620 but now needs a minimum score of 640, he said. "Some consumers are being squeezed out of the market," Zionts said. "Some of the more forgiving guidelines are beginning to go away." Credit scores are formulas kept by national credit bureaus and used by lenders and credit companies to determine if a consumer is creditworthy. Scores drop when customers fail to pay installment loans on time or have a high income/debt ratio. Most lenders consider scores above 700 to be a sign of good financial health and scores below 600 to be risky and a reason to increase the interest rate on a loan, according to Fair Isaac Corp., which invented the score. Skyrocketing property values in the recent housing boom made it easy for homeowners to borrow heavily against their homes with second mortgages and home-equity loans. But as housing prices leveled off, overextended homeowners are defaulting because they cannot afford higher mortgage payments and can no longer refinance. The subprime market woes are hurting low-income, minority families the hardest, because they make up a large percentage of subprime consumers.
Last time I checked chicken little the money flow is still going strong just not with the usual places and faces. Akuma