Taking Bailout Money and Running

What happened to the BILLIONS the Fed poured in so banks will still lend money, folks?

Banks TOOK the MONEY and RAN, didn't they?

"Qualified borrowers face credit squeeze"

"by Kimberly Blanton, Globe Staff | March 23, 2008

Lenders are rejecting more loan applicants with strong credit scores, the latest indication the nation's credit crunch is deepening and further depressing the housing market and the economy.

Mortgage companies are growing more cautious and tightening lending standards for some of their most credit-worthy customers - from increasing down payments for home purchases to requiring higher credit scores for loan approvals.

An applicant has to be a prime borrower to qualify for a mortgage or to refinance a loan, said Thomas Marroni, president of New Boston Mortgage Corp., a loan brokerage firm. Two months ago, one out of every 15 of his top-rated loan applicants was turned down. "Now, it's four out of 15," he said.

Fifty-five percent of senior loan officers at US banks in January tightened lending standards to prime customers, up from 40 percent in October, according to the latest survey by the Federal Reserve Board. In recent weeks, the situation has deteriorated as mortgage companies worried about a recession have pulled back further on making new loans and refinancing existing mortgages, and have terminated home-equity lines of credit, said lenders, brokers, and borrowers....

So WHERE are all the BILLIONS GOING?

Richard Perlmutter, a Suffolk University Law School professor, has a gold-plated credit history, no car loans, and no credit card balances. He and his wife, an executive at Harvard Business School, hold only a $280,000 mortgage on an upscale Charlestown condominium assessed at $600,000. Last month, Countrywide Home Loans terminated their $100,000 home-equity line of credit, which they tapped for emergency cash but paid off quickly.

While it's legal for lenders to withdraw home-equity lines, it is rare. A loyal customer - the primary mortgage is with Countrywide - Richard Perlmutter was incredulous. Lenders, he said, have "lost any ability to discriminate" between good and bad borrowers.

Freddie Mac and Fannie Mae, the government-backed buyers of mortgages, are tightening standards even as they are investing up to $200 billion more into the loan market. Last week, for example, the agencies increased interest rates for borrowers with credit scores below 700 - previously, a 680 score triggered the higher rate. For borrowers seeking jumbo mortgages, the agencies increased the down payment required in some cases to 10 percent, from 5 percent, said Brian Koss, managing director of Mortgage Network Inc., a Danvers lender. "We call it jumbo light," he said.

During the housing boom, lenders relaxed their standards, allowing homebuyers with bad credit to borrow without a down payment and proof of income. Loose standards fueled the housing boom but now record numbers of delinquencies on subprime mortgages are aggravating the decline in sales and prices. Subprime borrowers could not make their monthly payments when their adjustable interest rates rose, causing foreclosures to soar. Now lenders are tightening credit to prevent more delinquencies in their portfolios, and some economists worry lenders are overcompensating for their past mistakes.

A mortgage-market contraction could prolong the housing slump and hurt the US economy, which most economists believe is already in a recession. If fewer people are able to take advantage of falling mortgage interest rates to refinance and lower their monthly payments or extract home equity, there will be less money circulating in the economy.

"When people with what looks like very good qualifications can't get access to credit, that is the classic credit crunch," said Nigel Gault, senior US economist for Global Insight, a Waltham consulting firm. "If people don't get credit they can't spend, and if they can't spend they don't generate the incomes for other people, and the economy looks worse. Then you're in a very nasty spiral," he said....

Home-equity loans and home-equity lines of credit are also scarcer because home prices are falling. Homeowners use these loans to obtain cash for renovations or other expenditures. They are backed by the equity in the borrower's house, which is equal to the property's market value minus the amount owed on the mortgage. With home prices dropping, banks are skittish about lending against properties that may lose more value in the future.

But the t.v. yaks-yaks never mention that!!!!

Countrywide, one of the nation's largest mortgage lenders, recently confirmed it is analyzing its loan portfolio and would cut off lines of credit to some customers...."

I want my $200 billion bailout money back then!!!!!!!!!

This while the executives skipped out with billions before the collapse!

How you doing on that bowl of shit, 'murkns?