Home Mortgage Broker nears bankruptcy
The long-awaited "sub-prime" crisis may yet be heralded by the bad news released today about Home Mortgage Investment Corp. and its reported troubles making payments.
And yet - consumer confidence in the US continues to surge ahead of other business indicators (see below).
American Home Mortgage Investment Corp. edged closer to bankruptcy Tuesday, as its solvency woes killed a rally on Wall Street and renewed fears of worsening credit quality in the troubled mortgage market.
The struggling mortgage lender said its financial backers have essentially pulled the plug. The Wall Street banks that lend American Home Mortgage money for home loans — which include firms like UBS AG, Bear Stearns Cos., and JPMorgan Chase & Co. — will not extend the company any more money, and some have demanded back they money they have lent.
The Dow Jones industrial average, which had been up more than 120 points earlier in the day, closed down about 147 points after the news from American Home reminded investors of the tenuous state of the credit markets of late.
And here is the promised link to the surge in consumer confidence:
Consumer confidence in the U.S. jumped more than forecast this month to the highest level in almost six years, suggesting the June slowdown in spending may be temporary.
The New York-based Conference Board's index of confidence soared to 112.6, from a revised 105.3 the prior month. Earlier today, the Commerce Department reported that consumer spending rose 0.1 percent in June, slowing from a 0.5 percent gain in May. A measure of inflation closely watched by the Federal Reserve eased.