| Fed policy-maker warns U.S. near recession
CHATTANOOGA, Tenn (Reuters) - The U.S. economy could be slipping into recession and the Federal Reserve must cushion the pain, a top Fed policy-maker said on Thursday in remarks supporting hopes for more interest rate cuts. Dennis Lockhart, president of the Atlanta Fed, was one of a number of central bankers on the luncheon speaking circuit hours after government data confirmed anemic growth in the fourth quarter, which analysts say has since slowed further. "It's clear the economy is in a slowdown that resembles past periods that were the leading edge of a recession," Lockhart told a Rotary Club meeting. "I believe that an important policy objective at this juncture is to ensure that this slowdown is short and shallow." The Fed last week slashed benchmark lending rates by a hefty three-quarters of a percentage point to a three-year low of 2.25 percent, in addition to the other measures it has introduced to keep money flowing in markets.
Mortgage scam focused on 'desperate'
SACRAMENTO -- Federal prosecutors Monday announced indictments in a mortgage scheme that victimized more than 100 homeowners and siphoned off nearly $13 million in home equity. Dozens of people in California and elsewhere lost their homes in the scam, which prosecutors say was led by Charles Head of La Habra. He and 18 others face allegations that they preyed on homeowners who were struggling to make payments on adjustable-rate and other mortgages. As part of the scam, homeowners facing foreclosure were promised lower house payments and even cash upfront to help pay bills if they agreed to add another name to their home's title. The victims were led to believe they were paying rent to the investor while they got their finances back in order. According to the unsealed indictments, Head and the others actually used the scheme to switch the names on the titles, take control of the homes, refinance them and walk away with whatever equity homeowners had built up.
Number of mortgage deals plummets
The number of different mortgage deals available has dived by nearly two-thirds since the credit crunch first hit last summer, figures show. There were just 5,725 different deals for borrowers to choose from at the end of last week, down from 15,599 at the beginning of July 2007, according to financial information group Moneyfacts. Unsurprisingly, the biggest fall in choice has been for people with adverse credit histories, with the number of sub-prime deals available nose-diving by 81% to just 1,798 mortgages, including buy-to-let loans, down from 9,531 in July, as lenders become increasingly risk averse. But the total number of buy-to-let products has also fallen by 60% since last summer to just 1,444, while there are now only 2,565 different mainstream mortgages, a third less than the 3,803 that were available in July.
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