Readers suggested a topic on subprime woes. "Is the credit crunching subprime meltdown thingy over OR are we just getting started?"

One replied, "I think we’re just getting started and it is going to get worse before it gets better. A lot worse."

One looked at the secondary market, "It depends on whether someone with $$$ thinks they can hedge their way around it. They’re probably working on that as we speak. The 'returns' are very enticing and institutional investors have high expectations. So many hedge funds depend on this. My guess is a fix will be forthcoming that will ultimately fail too."

A reply, "Oh, that’s practically a given! It just postpones the pain and makes it worse in the long run by putting it off."

One brought up who might be affected. "We might explore how far the rings go out from the Sub-prime implosion. Clearly the 'investors' who buy the mortgages and package them into mortgage backed securities and sell them are affected. The buyers of the MBS are clearly affected particularly since defunct lenders can’t honor their obligations to re-purchase loans previously sold when they default early."

"What does the holder of an MBS do when loans default and the originator can’t buy them back? Foreclose on them himself? Does the organizer/packager of the loan pool have an obligation there? How about the pension funds who hold MBS? They are already seriously underfunded in many cases. How about realtors?"

"People who had inadequate income were buying homes. But the lenders are tightening the rules and that will shrink the pool of potential buyers of homes. The surviving lenders will be hit two ways; their originations will decrease with the tighter rules and they are experiencing cash drains as they repurchase the early defaults they sold previously. So even if they somehow survive business ain’t going to be good."

"I am sure these are just a few of the considerations of what the subprime meltdown means, so let’s discuss it and see what others know about the situation. It truly is the key issue of the day, it seems to me."

Another asks about a bailout. "Will the 'subprime meltdown' begin to affect the BIG banks and financial institutions who are involved with securitizations and derivative insurance? If so, are they 'too big to fail' and how would they be bailed out? At whose expense? Anyone think there will be some major lawsuits against the ratings agencies?"

The Houston Chronicle. "The easy flow of home loans to borrowers with spotty credit is becoming a memory, as these mortgages become far harder to come by. It used to be that 'if you breathe and have a Social Security number ... you were going to get a house,' said Mark Cady, executive vice president for Market Street Mortgage."

"David Starke has experienced the change firsthand. With a credit score below 620 and a recent history of unemployment, he needed a 100 percent financed subprime loan to be able to buy a home."

"Starke was approved for the loan he wanted late last year, but by the time he decided on a two-bedroom, one-bathroom home near the Heights, his lender said it was no longer offering such loans. His mortgage broker found another lender that would, but warned him that he had to close by Friday, after which the lender will stop offering such loans. Starke closed on Thursday."

"While he's found a good-paying job now, and says he needs the tax deductions that come with home ownership, he is still getting over the financial damage caused by two recent stints without a full-time job. 'I really needed this loan to repair old credit problems,' Starke said. 'It will be terrible for people in my situation if they stop making subprime loans.'"

From Reuters. "Countrywide Financial Corp., the largest U.S. mortgage lender, on Friday told its brokers to stop offering borrowers the option of no-money-down home loans, according to a document obtained by Reuters."

"'Please get in any deals over 95 LTV (loan-to-value) today!' Countrywide said late on Friday in an urgent e-mail to brokers. 'Countrywide BC will no longer be offering any 100 LTV products as of Monday, March 12.'"

"The general pullback in credit to riskier borrowers will take a toll on the overall economy, economists at Goldman Sachs Group Inc. said in a research note this week. More cautious lending could cut annual new home purchases by 200,000 units in 'a relatively conservative scenario,' the economists wrote."

"Losses on more than $2.6 billion in loans issued by WMC Mortgage, a Burbank, California-based unit of GE Money Bank, are expected to top 15 percent, the highest projected rate of any bond in the widely watched ABX derivative index of bonds issued in early 2006, a UBS Securities model showed."

"Thirty-day delinquencies rose to 9.62 percent in February, from less than 2.0 percent six months ago, on WMC's loans backing one of the 20 bonds in the ABX 06-2 index, according to Morgan Stanley, whose Morgan Stanley ABS Capital I Trust packaged the loans into home equity ABS."

"WMC issued $21.6 billion in loans last year, making it the ninth-biggest issuer, according to trade publication Inside B&C Lending. In 2003, WMC reportedly originated $8.2 billion. WMC on Friday said it stopped making 100 percent loan-to-value mortgages."

From Bloomberg. "The nation's banks are just beginning to feel the pain of defaults on risky mortgages they made at low introductory rates when housing prices were soaring, said U.S. Federal Reserve Governor Susan Bies, who has been the Fed's top banking policy official in her tenure at the U.S. central bank."

"'In the housing markets and bubbles that occurred in some areas, to afford housing, people pushed their limit to afford a house,' Bies said. 'And in doing so, lenders tried to create products to meet those demands.'"

"Bies said today banks are likely to see more missed payments and foreclosures as consumers with weak credit histories begin to face higher monthly mortgage payments."

"'What's happening is the front end of this wave of teaser- rate loans that are coming into full pricing,' Bies said. 'So what we're seeing in this narrow segment is the beginning of the wave. This is not the end, this is the beginning.'"