Lenders wise to beef up default-risk reserves

Part 1: Fixing the housing finance system
Published on May 5, 2008

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by CareyBot

(This is Part 1 of a five-part series.)

The housing finance system, while still functioning, is in a crisis state. Interest-rate risk premiums -- the rate increment on mortgages classified as riskier -- are two to four times as large as they were two years ago. Day-to-day rate volatility, which can cause havoc in the relationships between borrowers and loan providers, is larger than I have ever seen it.