Lender woes continue to mount.
Richard Schmitt reports today that a federal grand jury in L.A. has started probing three fallen hometown lenders and their subprime loan activities.
Subpoenas have been issued in recent weeks and months to Countrywide Financial Corp., which is now part of Bank of America, New Century Financial Corp., which is under Bankruptcy Court protection and IndyMac Bank, which was seized by federal regulators two weeks ago.
The question seems to be whether fraud and other crimes contributed to the national mortgage debacle. But several sources quoted by Schmitt suggest that the complexity of building cases against the companies may be very difficult for the feds to make.
"What they may find is a lot of incredibly sloppy practices that are not necessarily criminal," says Bert Ely, a Virginia-based banking consultant.
A Business section feature on Newport Beach-based Downey Savings & Loan sets up the thrift's dismal news today of another quarterly loss and a growing number of bad loans on its books. The results sent the CEO and board chairman packing.
Some lenders seem to be dealing with their builder clients as they are their home-loan customers. The Times' Peter Hong talks to some local builders who say that banks are making it difficult for them to work out their faltering loans, which could lead to defaults and bankruptcies.
Many builders will go under, [Barratt American president Mick] Pattinson said, because "banks aren't supporting businesses that supported them for decades."
Maybe the building industry will need its own congressional rescue similar to the one the White House has now agreed not to veto. The House housing rescue bill approved yesterday would stave off foreclosure for hundreds of thousands of homeowners.
-- Annette Haddad
Photo credit: Mark Boster / Los Angeles Times
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