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Countrywide warns of potential loan dangers
LOS ANGELES -- Countrywide Financial Corp. has seen mortgage defaults rise as the housing market went from boom to bust, but the nation's largest home loan provider says it could have more trouble ahead with a particularly risky slate of loans -- pay-option adjustable rate mortgages.
Pay-option loans give borrowers the option to make a lower payment but can result in the unpaid portion being added to the principal balance. They also have the potential to provide high yields to investors who purchased the loans from lenders during the housing boom.
As of the end of December, Countrywide had nearly
$29 billion in pay-option loans, with about $26 billion of the total having grown beyond their original loan amount, the company said in a filing late Friday with the Securities and Exchange Commission.
"Our borrowers' ability to defer portions of the interest accruing on their loans may expose us to increased credit risk," the company said. It added that its risk could be greater because the amount of deferred interest on pay-option loans was on the upswing.
The company noted some
81 percent of the loans were made out to borrowers who provided little or no documentation on their income. As of the end of December, 71 percent of borrowers with pay-option loans were electing to make less than full interest payments.
Rival boards approve settlement that will end Finish Line's failed bid
INDIANAPOLIS -- The boards of Finish Line and Genesco have approved a settlement that would end the failed, $1.5 billion bid by Finish Line to acquire its larger retail rival.
A day after Genesco Inc. announced terms of the settlement, the companies said Tuesday their boards had approved it. Under the deal, Finish Line Inc. and the investment banking firm UBS AG agreed to pay $175 million to Genesco, which will also get a 12 percent stake in Finish Line.
The Finish Line operates 791 stores, including 94 Man Alive locations, in 47 states. Genesco operates about 2,000 retail stores in the United States and Canada under brand names like Journeys, Johnston & Murphy and Hat Shack.
