Loan Defaults

Senate Banking Committee Chairman Christopher J. Dodd said Wednesday that regulators bear some responsibility for problems in the sub-prime mortgage sector and that he plans to call them before the committee for questioning. "That's what's made me angry here -- that the regulators apparently have not been doing as good a job as I think they should have been doing," Dodd (D-Conn.) told reporters after speaking at a U.S. Chamber of Commerce conference on market competitiveness.

The parent of Ameriquest Mortgage Co., once the biggest provider of home loans to Americans with checkered credit, fired a large number of its workers Thursday and closed six operations centers around the country in a bid to survive the shakeout in sub-prime lending. Two years ago, Orange-based Ameriquest was at the top of the game -- sponsoring the Rolling Stones on tour and the halftime show at Super Bowl XXXIX.

Oscar De Leon was washing his car a few weeks ago when he noticed a piece of paper stuck to the front door of the house across the street. He strolled over to check it out. "You are in default," the paper proclaimed. "Unless you take action to protect your property, it may be sold at a public sale." De Leon, who lives in the Riverside County town of Perris, knew this official notice of foreclosure was bad news.

Exotic-sounding mortgages that hardly anyone even heard of a few years ago might seem an unlikely topic for the national political debate. But that was before rising defaults threatened the housing market and, perhaps, the broader economy. "We've got to take action," Sen. Hillary Rodham Clinton (D-N.Y.) told an audience of community activists Thursday.

As mortgage lender New Century Financial Corp. collapsed last week, some of the Irvine company's top salespeople relaxed at scenic Dromoland Castle in Ireland, which boasts that it pampers guests like they were "landed gentry." The trip to Dromoland and other Irish haunts was booked in better days for winners of the firm's President's Club awards.

U.S. home builders lost confidence this month amid concern that tighter credit standards would discourage would-be buyers. The National Assn. of Home Builders/Wells Fargo index of sentiment fell to 36 this month from February's revised 39, a seven-month high, the Washington-based association said Monday. A reading below 50 means most respondents view conditions as poor.

The shakeout in the sub-prime lending industry continued Monday, with more people losing their jobs and a prominent lender losing its name on a baseball stadium. Fremont General Corp. of Santa Monica said it had told "significant numbers" of its 2,400 home-loan employees to expect pink slips in two months. Company officials declined to say how many employees would be dismissed. Fremont is the latest lender to announce layoffs in the sub-prime market, which targets people with dented credit.

Steve Nguyen bought his first home, a three-bedroom ranch house in Lakewood, three years ago with a no-interest sub-prime mortgage. Since then, the sub-prime market has virtually collapsed, leaving many nervous about the housing market and the national economy. But Nguyen, 31, is feeling confident. Though he figures his home's value fell at least $40,000 during the last year, he gained $200,000 in equity during the five-year boom.

Nearly everyone agrees that the sub-prime lending industry is in crisis. Now, what to do about it? On Capitol Hill Thursday, lawmakers, regulators and mortgage industry executives jousted over the best way to curb shaky lending practices without putting homeownership out of reach for millions of Americans. "That is the concern," Sandor E. Samuels, executive managing director of Countrywide Financial Corp. of Calabasas, told the Senate Banking Committee.

Borrowers, don't hold your breath for a bailout. As mortgage delinquencies soar, many consumer advocates and political leaders are calling on government to help what may ultimately be millions of homeowners facing foreclosure. But the modest federal and state aid proposals advanced so far suggest that most people struggling with onerous loan payments are unlikely to get government assistance.