| Chinese banks' earnings escape mortgage damage
SHANGHAI, China -- Major Chinese lenders Industrial & Commercial Bank of China and Bank of China posted record profits in 2007, as gains in interest income and fee-based businesses offset losses from the global mortgage-lending crisis. Chinese financial institutions sectorwide are reporting strong profit growth in contrast to the malaise afflicting Western lenders ensnared in credit woes tied to the U.S. housing market. Bank of China, the country's most international bank, reported that its net profit rose 31 percent to 56.3 billion yuan ($8 billion) in 2007, despite its nearly $5 billion in investments in mortgage-backed securities. That result, up from 43.8 billion yuan in 2006, beat analysts' forecasts. Bank of China has reported the highest exposure among Asian banks to the U.S.
Laying the Foundation for Recovery
If you're looking beyond the current gloomy economic conditions toward brighter times, you should know that any recovery must begin with housing. It's the origin of the turmoil in the credit markets, and tighter credit conditions are the biggest threat to overall growth. The bad news is a housing turnaround is still a ways off. The good news is that policy moves by the Federal Reserve, Congress, and other Washington agencies are laying a foundation that will stabilize housing and support an upturn. .
Mortgage market gets back to basics
To buy a house in today�s market, the new ways of borrowing are out, and the old ways are back in. �The mortgage business swings like a pendulum,� said Elaine Shepperd, Cornerstone Mortgage Co. branch manager in Temple. �The government is tightening down on all the lenders.� Caren Hildinger, a certified mortgage planning specialist in Temple, agrees with the pendulum analogy. �We�re getting back to the basics of prudent underwriting,� Ms. Hildinger said. �The guidelines have been so lenient some people were getting mortgages that didn�t need to be getting them. And now the industry has paid for that. The type of business you did a year ago, you can�t do now.� Mortgage professionals point to three specific changes in home lending guidelines they say are necessary corrections that get back to the basics: lNo more borrowing with little or no money down lGood credit scores necessary lNo more 100 percent financing Although myriad circumstances can attribute to someone losing their home, Bell County foreclosures suggest the need for more stringent lending requirements.
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