CNBC
S&P sees end to subprime mortgage writedowns
Standard & Poor's said subprime write-downs for large financial institutions are likely past the halfway mark, but they could still hit $285 billion.
MAKING SENSE OF THE STORY FOR CONSUMERS
S&P's statement gave a boost to financial stocks and helped Wall Street indexes pare losses.
The purging of bad loans in the subprime market through foreclosure or refinancing ultimately will strengthen everyone's ability to obtain mortgages.
Fewer foreclosures mean fewer vacant homes, which may make a neighborhood a more desirable place in which to live. That, in turn, could increase the demand for housing.
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Bakersfield Californian
Commercial real estate market is running strong
Bakersfield's housing market is facing tough times, but commercial real estate in the area remains relatively strong, due partly to demand from the agriculture and oil industries.
MAKING SENSE OF THE STORY FOR CONSUMERS
Demand for multifamily housing has surged as potential home buyers face tougher mortgage requirements, higher debt payments, and declining home values.
The office market is solid, but warehouse and distribution sectors may slow if the economy weakens further.
Banks have had trouble selling debt so financing is tight, but the federal government is stepping in aggressively with moves designed to protect large investment banks.
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Bloomberg
Bear Stearns Rescue Is `Finger in Dike,' Scholars Say
With Bear Stearns Cos.' rescue, the $200 billion subprime crisis joins a long history of government bailouts to preserve jobs, homes, and savings.
MAKING SENSE OF THE STORY FOR CONSUMERS
Bear Stearns failing would have reverberated well beyond the investment banking sector. Large investment bankers such as Bear Stearns provide much of the capital that eventually finds its way into the pool of money used to fund mortgage loans.
Most investment bankers are heavily leveraged. That means they fund investments by borrowing. If they invest well, they can pay off debt and still make a profit. But if no one will lend to them, investment bankers can neither pay debt nor make investments. That combination can cause an institution to fail. Bear Stearns was not the only heavily leveraged investment bank. Many other large Wall Street firms also are dependent on the ability to borrow to survive, so a loss of confidence resulting from the failure of a major player could easily have brought down several others.
The credit crunch, or consumers' difficulty obtaining mortgage loans, is one of the greatest hindrances to a real estate market rebound. In recent months, even prospective buyers with good credit have had trouble securing a loan. If financial markets stabilize, that could help boost demand for housing.
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