Mortgage Domino Effect

HSBC, Europe’s larges bank, plans to shut down a mortgage servicing office in Indiana which would cut another 600 jobs. Accredited Home Lenders will close more than half of its mortgage operation, cutting its work force from 2,600 to 1,000.

Lehman Brothers Holdings Inc., the nation’s fourth largest investment bank, is closing its BNC Mortgage LLC subsidiary. The Wall Street investment bank said it is shuttering its subprime mortgage business because of the turmoil in the home lending industry.

Toll Brothers Inc., the nation’s largest builder of luxury homes, reported that their third quarter profit plunged nearly 85 percent to 16 cents per share. The housing downturn and credit worries triggered cancellations and hefty write downs which accounted for the hefty loss.

Where is the Fed?

Secret plans laid by Federal Reserve Board Chairman Ben S. Bernanke for a gradual, non-inflationary easing are no longer in play. With the Federal Open Market Committee meeting coming up on September 18, 2007, Fed watchers doubt that the committee will do more than cut the federal funds rate by 50 basis points.

The dominoes have all been lined up and the effect is starting to take place. It started with the sub prime mortgage lenders and has worked it’s way all the way to the top to Countrywide. Homebuilders are now beginning to feel the effect of the credit crunch and it is time for the Fed’s to try and save the day. There is only so much that the Fed’s can do, will it be enough?

For more information visit the Minnesota Mortgage online news source.