The credit crunch showed few signs of abating going into 2008, and threatened to magnify the housing downturn by adding more foreclosed homes to already bloated inventories and making it impossible or too costly for many would-be home buyers to obtain a loan. While dozens of mortgage lenders stopped making loans or went out of business in 2007, a bigger problem for many borrowers has been the tightened underwriting standards rushed into place by lenders who remain. Interest rates on "vanilla" fixed-rate, conforming loans of $417,000 or less made to borrowers with good credit dipped briefly below 6 percent at the end of 2007, and could continue to fall in 2008. But borrowers with less-than-stellar credit, if they are able to obtain financing at all, are paying higher rates and fees, reduc...
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