RISE IN FORECLOSURES IMPACTS STOCK MARKET

Stocks fell last Tuesday in the wake of a report indicating that things will get worse before they get better when it comes to the housing market. A record number of homes were in foreclosure in the fourth quarter, and even strong markets like California showed a growth in default rates.

While the economy remains relatively strong and unemployment drops, subprime lenders are feeling the squeeze as their shares fall. New Century Financial had to stop making loans last week, and even Countrywide Financial--the nation's largest mortgage lender--is deciding on more strict standards.

Some mortgage company executives stress that there is nothing to worry about--that the streak of credit problems is contained within the subprime category--but Senator Christopher Dodd of Connecticut says that there is a possibility the government will need to step in and provide aid to struggling homeowners or those who have lost housing.

To read the entire article by the New York Times' Vikas Bajaj, please go to Bad Loans Put Wall St. In A Swoon