Many large mortgage lenders and banks are shying away from subprime mortgages, leaving much of the lending to credit unions. These institutions are not funded through securitization and thus can afford to make the loans to qualified individuals. Since many of them are not experiencing the credit crunch (thanks to consistent lending standards), the can afford to maintain the same standards and not suddenly tighten them. As a result, they may be an excellent source of funding for those looking to obtain non-traditional mortgages to stay afloat.

From the Wall Street Journal:
When it looked like Candido Rodrigues would lose his home, he was rescued by an unexpected source: a credit union. Like many homeowners caught in the credit crunch, Mr. Rodrigues, a social worker, faced rising interest rates on his subprime mortgage. Eventually, he couldn't afford the $2,800 monthly payments, not even with a second job. Banks weren't willing to refinance the mortgage. They gave him lots of excuses -- not enough equity, not enough salary. He didn't expect a credit union would either -- he wasn't even a member -- but it refinanced his home on terms that allowed him to stay afloat.

Students could face big problem come fall as many lenders are predicting that college loan rates will increase while loans themselves will be much harder to come by thanks to difficulties in the credit market. The subprime mortgage crisis has driven investors away from asset-backed securities that are a critical source of capital for many student lenders. And recently, the market for auction-rate securities, an investment vehicle tied to student loans, has frozen almost completely. It'll be interesting to see how this plays out...

From the Wall Street Journal:
Amid a widespread tightening of credit, some student lenders predict college loans will be harder and more expensive to come by for the fall. Without a break in the credit crunch -- such as stepped-up lending by major banks -- the situation could become far worse, these lenders say, leading to many students being unable to fund their educations. "There is no question in my mind that, unless something changes in the marketplace, there will be a shortfall of funds available to make student loans," says Mark Valenti, president of the Connecticut Student Loan Foundation, a nonprofit lender based in Rock Hill, Conn. "I've been doing this since 1978, and I've never been more nervous."

News keeps getting worse for those who own homes in bubble regions like California and Florida. A recent study found that homes in those prices remain substantially overvalued compared to the incomes of those living in the area. This means that home prices - which have already been dropping through the end of last year - are set to continue dropping well into this year and perhaps over the next few years. It may be awhile before there is an opportunity to start buying...

From the Wall Street Journal:
If you own a home in a former bubble region like California or southern Florida, there's bad news… and really bad news. And they suggest that it is still way too early to go bargain hunting in these markets, although -- of course -- there is always the occasional deal around. The bad news is fresh market data published Monday night by real-estate Web site Zillow.com. They show prices, as expected, kept slumping through the end of last year. A new report from Zillow.com shows home values dropped nationwide by 3%. Chief Financial Officer Spencer Rascoff discusses which cities saw the largest declines. But the really bad news is that, even after a year of misery and falling prices, homes in many of these regions still aren't cheap. They remain wildly overvalued compared to average personal incomes.

Oil prices may be in danger of rising after Venezuelan President Hugo Chavez renewed his threat to cut off his country's oil supply to the United States. The move comes after the U.S. decided to back Exxon Mobil's effort to win compensation from Venezuela for $12 billion in assets that were seized (nationalized) by the government.

From Reuters:
The United States backed Exxon Mobil Corp's effort on Wednesday to win compensation from Venezuela for seized assets in a case that has prompted the OPEC nation to threaten to cut off oil supplies to America. Venezuelan President Hugo Chavez, a foe of the United States, says Exxon court victories that resulted in $12 billion in Venezuelan assets being frozen over the seizure is part of an "economic war" to unseat him directed by the Bush administration.

Student loan costs may be set to rise as borrowers are looking for even more security for their investment. Securities tied to these loans, which was considered a safe investment, now appear to be affected by the credit crunch. Auctions of these securities auctioned on Thursday failed to generate interest from investors, leaving roughly $2 billion on the table. Unfortunately, banks can't afford to pick up the slack these days and keep the securities, so they may have to raise student loan prices in order to make the interest rates on the securities more attractive to investors. Bad news for students...

From the Wall Street Journal:
Securities tied to student loans, another seemingly safe corner of the credit markets, are succumbing to the credit crunch. Wall Street's financial-engineering machine bundles together long-term student loans and uses them as collateral for short-term investments owned by money-market investors. Since Thursday, auctions of these securities conducted by Goldman Sachs Group Inc., J.P. Morgan Chase & Co. and Citigroup Inc. have failed to generate investors' interest, leaving roughly $3 billion of such securities in a sort of limbo. Under normal conditions, the banks would step in when investor demand is weak -- just as a specialist on the New York Stock Exchange intervenes to keep trading liquid in a stock. Because big banks are already bloated with other kinds of loans and bonds they are trying to get rid of, they have been allowing the auctions to fail.

The Bush administration and six mortgage lenders announced a plan plan to bail out many homeowners that are now in danger of losing their homes in foreclosure. The so-called "Project Lifeline" would grant qualified individuals experiencing problems with loan modifications and beneficial refinancing. Borrowers who are more than 90 days late and fit the criteria would be sent a letter giving them a step-by-step approach that "may" enable them to "pause" their foreclosure for 30 days while potential loan modification is evaluated. Additionally, the new effort is set to help all mortgage - not just subprime - which signals that the government is finally realizing how large the problem really is.. let's hope that it works!

From the Wall Street Journal:
The Bush administration and six major mortgage lenders unveiled their latest response to the continuing turmoil in the housing market, offering to "pause" the foreclosure process for seriously troubled homeowners. Although the announcement of "Project Lifeline" was couched in tones of optimism, officials cautioned that it is only an incremental step that would not guarantee help for every homeowner facing the loss of their home.

"No program can bring every struggling borrower into the counseling and evaluation process, and we cannot help those who choose not to honor their obligations," said Treasury Secretary Henry Paulson. "None of these efforts are a silver bullet that will undo the excesses of the past years."

The White House came out today saying that the current economic crisis to merely a "short-term uncertainty" while Wall Street appears to be pricing for a recession. The report put out by the White house, known as the Economic Report of the President" argued that the current problems with the housing market and credit crisis and fairly marginal events that should pass with the help of the proposed economic stimulus package. The view is confirmed by some high-profile investors, such as Warren Buffett, who believes that the sell-off in the stock market is overdone, while many other experts argue that the U.S. is set for a prolonged downturn. The fact is that the housing market will continue to see ARM loans reset through 2010, but the number of bad loans and effects remain to be seen.

From the Wall Street Journal:
President George W. Bush said that the economic stimulus package passed last week by Congress will help the U.S. economy deal with short-term uncertainties. Mr. Bush made brief remarks before signing the annual Economic Report of the President, which was drafted by his Council of Economic Advisers. "This report indicates that our economy is structurally sound for the long term, and that we're dealing with uncertainties in the short term," Mr. Bush said. He is to sign the stimulus package into law on Wednesday. "It's going to help to deal with the uncertainties," Mr. Bush said.

Americans appear to finally be curbing their spending habits as credit card delinquencies continue to rise and credit dries up. The number of consumers borrowing from their credit cards dropped dramatically, according to a report yesterday put out by the Federal Reserve. Earlier this month, we also saw data from Mastercard that suggested that people are shifting their spending from discretionary items to staples like groceries and gas. Combined, these things point to a consumer that is finally starting to slow down. However, it may be too late for many as credit card delinquencies rise more than ever before. Those that find themselves in such debt should contact a debt settlement company that can help reduce and consolidate their outstanding unsecured debt. Call 866-559-DEBT (3328) for a free consultation.

From the Wall Street Journal:
Credit-card delinquencies are rising across the nation, a sign that some Americans are at the end of their rope financially. And these mounting delinquencies, in turn, have prompted banks to tighten lending standards, keeping people who have maxed out their cards from finding new sources of credit. The result could be a sharp pullback in consumer spending that would further weaken the slowing U.S. economy. Such a pullback may already be taking shape. Yesterday, the Federal Reserve reported an abrupt slowdown in consumers' credit-card borrowings. In December, Americans had $944 billion in total revolving debt, most of it on credit cards, a seasonally adjusted annualized increase of 2.7%. That was off sharply from seasonally adjusted growth rates of 13.7% in November and 11.1% in October. And it reflects the volatility in consumers' spending habits as economic growth sputters.

Congress finally approved a $168 billion aimed at increasing consumer spending by issuing rebate checks to more than 130 million households. Taxpayers should look for checks of up to $600 for individuals, $1,200 for married couples, and $300 credits for each child. Millions of people who do not pay income taxes (such as retirees or veterans) would receive rebates of $300 for individuals and $600 for married couples. The amounts would phase out for incomes above $75,000 for individuals and $150,000 for married couples. This is good news for those who need the extra money to pay bills, but it may be a costly $168 billion for the economy to absorb right now.

From the Wall Street Journal:
Congress approved a $168 billion bill to boost the economy, paving the way for more than 130 million households to start receiving rebate checks this spring. Under the final bill, most taxpayers would receive checks of up to $600 for individuals, or $1,200 for married couples, amounts that would begin to phase out at incomes above $75,000 for individuals and $150,000 for married couples. Millions of people who don't pay income taxes but have incomes of at least $3,000 would receive smaller rebates of $300, or $600 for married couples. This group would include Social Security recipients and military veterans receiving disability payments, as well as their surviving spouses -- a provision generated by the Senate. People receiving rebates would receive $300 credits for each child.

Target retirement funds are quickly becoming the funds of choice for financial advisors and others looking for an easy way to optimize their portfolio allocations automatically with no additional work. Those who are setting up Roth IRAs or other retirement accounts may want to check out these options as they can eliminate the need for a financial advisor at all and make it much easier to keep everything in order!

From CNN Money:
Target retirement funds aren’t for everyone, but they’re a good option for many people who don’t want the hassle of rebalancing their portfolio says Money Magazine’s Walter Updegrave. I think going with a target fund can protect us from our worse impulses - namely, the urge to dart in and out of different sectors of the market, move from stocks into cash or bonds, buy into the hot fund du jour, etc. By putting your portfolio strategy on autopilot, I think you’re less likely to engage in self-defeating behavior.

The residential housing market may have some more downside before things even out, according to the National Association of Realtors. The organization increased their projected declines in home valuations for the first quarter again this month and projected further declines going into 2008. This is a drastic change from their projections just a few months ago that housig prices would be flat in 2008 and begin to rebound. As foreclosures continue to increase, more and more pressure is being placed on housing prices amid rising supply and decreasing demand.

From CNN Money:
In a fresh sign that the nation's housing crisis will worsen, home prices are likely to decline in 2008 for the second straight year, the National Association of Realtors said Thursday. The Realtors, in its monthly economic and sales outlook, is forecasting a 1.2% drop in prices of existing homes sold this year. Only a month ago, the association was forecasting that prices would be flat in 2008 and that the home market would rebound in the last half of the year.

The Federal Reserve released another one of its key surveys last night that indicated that credit continues to tighten across all parts of our economy. The mortgage market and commercial real estate markets have seen the largest tightening, but there have still been some serious problems in other types of consumer and corporate loans. Notably, funding for private equity and strategic takeovers has all but completely dried up while even auto loans are difficult to find at good rates for consumers. In the end, it may be awhile before demand starts to pick up once more.

From FXStreet:
Yesterday night the Federal Reserve released the Senior Loan Officer Opinion Survey. The report conveys a survey of the lending standards for the prior three months to January. Generally, the report indicated a tightening of overall credit in all parts of the economy. In particular the mortgage credit market and commercial real estate have been facing some serious tightening. At the same time overall demand for loans has been weakening.

The Federal Reserve has decreased interest rates several times this year by as much as 2.25% since September, meaning the lenders are now paying less than ever to borrow money that they can re-loan to realize a profit. One of the largest lenders in the United States - credit card companies - have seemingly ignored the rate decreases as they have actually increased the cost to borrowers! Those who have experienced such rate increases may want to shop around for a new credit card that offers fairer terms to users that follow trends in the industry.

From The Motley Fool:
Our friends at the Fed recently lowered interest rates sharply -- and then did so again. My Foolish colleague Chuck Saletta doubts Fed Chairman Ben Bernanke's wisdom, while Matt Koppenheffer sees merits in his actions. And while you probably know that the rate cuts will affect those taking out or refinancing mortgages, you may not know that the credit cards in your wallet could be affected, too. Given a total drop of 1.25% in just the past few weeks, and 2.25% since September, you'd think that your trusty credit card-issuing bank would have lowered your credit card rates accordingly. In some cases, you'd be right -- but not in all.

Credit card companies use a number of tricks to levy fines on your account and collect as much as possible. The Consumerist showed yet another example of this practice when they allowed automatic withdrawls to continue even after accounts have been closed and the have ceased sending statements. In this case, a $38 late fee was imposed... for nothing.

From Consumerist.com:
When Capital One "closes" your credit card account, they'll continue to allow automatic withdrawals even though the account is closed. But they won't send you a statement—you know, because it's closed!—so that you'll end up with late fees. Quenten experienced this first hand when he closed his account recently, and now Capital One has sent his account to collections over a $38.00 late fee for two 38-cent charges that he never knew about.

One of the UK's largest credit card issuers was recently forced to withdraw credit from seven percent of its consumer base (161.000) people in order to increase its liquidity amidst a credit crunch that has affecting many others in the industry. So far, however, it appears that the other players are content without cutting back on their consumer accounts. For better or for worse, many are still letting consumers spend money they don't have...

From Reuters:
Egg’s move to withdraw credit from seven percent of its customer base - a total of 161,000 people - serves as a stark reminder of the severity of the credit crunch, and how it is impacting the man and woman on the street. A quick ring-around other main players in the credit card market - Barclaycard, MBNA, Halifax and Capital One included - did not uncover any other plans to mass-close accounts. But few can deny that the liquidity crisis is continuing to have an impact on consumers.