One big slice of the blame for the mortgage mess is the credit rating agencies who were way off in their ratings of mortgage-backed securities. They rated a lot of stuff AAA — which means really good — that turned out to be junk.

Read more on Tightening Regulation On Credit Ratings…

Americans are no longer thrilled to extend their debts. For the last six months, the amount we owe on credit cards, auto loans and other forms of consumer loans dropped, according to the Federal Reserve. That's the longest decline since 1991.

Read more on Recession Reshapes California's Housing Market…

If you walk away from your mortgage, your credit will be thrashed for years. If you are late on your mortgage payments, your credit score will take a severe dip.

What you do about your mortgage troubles will have varying effects on your credit score.

Read more on Mortgage Troubles Destroying Credit Scores…

I am reading the 2008 book by Charles Morris, "The Trillion Dollar Meltdown: Easy Money, High Rollers, and the Great Credit Crash."

He is publishing in February 2009 a revised paperback edition called "The Two Trillion Dollar Meltdown."

Read more on The Two Trillion Dollar Meltdown…

Report:

Economic uncertainty is plentiful these days, at UTD and elsewhere. The day previous, the House of Representatives rejected a $700 billion plan proposed by Treasury Secretary Henry Paulson, chairman of the Federal Reserve Board Ben Bernanke and U.S. President George W. Bush to rescue ailing financial institutions and loosen credit markets.
mortgage giants Fannie Mae and Freddie Mac, followed the unexpected collapse of Lehman Brothers Holdings and Merrill Lynch. Their failure precipitated with the wholesale restructuring of the investment banking industry, according to press releases issued by the Federal Reserve.
"This crisis is often referred to is a meltdown," said Nathan Berg, associate professor of economics. As demand increased, so did home prices. Riskier borrowers, who in a weaker housing market would have defaulted on mortgage payments, simply sold or refinanced their homes, which were already worth more than their purchase price, Day said.
The housing bubble that resulted allowed lenders to pursue riskier loans without suffering any negative consequences. Increased defaults in the mortgage market soon infected other sectors of the economy through complex financial markets. In order to free up capital to make more loans, lenders sell their mortgages to investors. "The rating agencies were ignoring the previous three decades in the housing markets," he said. Although poor mortgage lending practices sparked the crisis, economists disagree on the extent this was responsible for the problems in the broader economy.
Economists disagree on the severity of the economic crisis. Day said that regardless of the economic situation, UTD students should focus on their own financial responsibility.

Read more on Students Struggle With Financial Downturn…

From Bloomberg:

California Governor Arnold Schwarzenegger says his and other states may need emergency federal loans as funding dries up.
Bernanke announced new moves today aimed at easing the lending crunch. The Fed will double its auctions of cash to banks to as much as $900 billion and is considering further steps to unfreeze short-term lending markets.
Gannett, the largest U.S. newspaper publisher, said Oct. 1 it drew on a revolving credit line to ensure it had funds to repay its commercial paper.
Duke, Caterpillar
Lending between banks is also seizing up. Republican Representative Jerry Moran of Kansas, in an interview with Bloomberg Television, encouraged the Fed to consider guaranteeing loans between banks.
Fed Powers
The central bank has power to extend credit to any company under "unusual and exigent circumstances." Investors anticipate the Fed will cut rates in an attempt to lower borrowing costs and encourage banks to lend. State and local governments having trouble meeting cash needs may push for help. "If states can't access the credit markets because of market conditions, then the Treasury should consider providing it," said Ben Watkins, a member of the debt committee of the Government Finance Officers Association, a group of public finance officials.
Services Endangered
Market disruptions forced Oregon to cancel a $21 million sale of bonds for the state university system and several other planned issues are in jeopardy, State Treasurer Randall Edwards said. Since 2005, New York Fed President Timothy Geithner has been pushing to reduce risks in the $54.6 trillion credit-default swaps market.

Read more on Where's The Next Front For The Credit Crisis?…

From MSNBC:

If you bank with a credit union, make sure that it is insured under the National Credit Union Insurance Fund, which provides similar protections for credit union account holders.
Retirement investments
The FDIC also provides coverage of up to $250,000 for certain retirement accounts, such as IRAs that are held in FDIC-insured financial institutions. Some brokerage firms also have supplemental insurance for certain investments, should their brokerage fail.
Money markets
Money market funds often have been considered a safe haven for stashing cash that you don’t want in riskier investments, such as stocks. Mutual fund firms, also, have taken steps to comfort worried investors, including disclosing money market fund holdings and posting information about their investment decision-making.
Russ Kinnel, director of mutual fund research with Morningstar, said the best way to assure that your money is safe in a money market fund is to choose a relatively large, low-cost fund from a large company. Consumer credit
For many Americans, the credit crunch that is a key factor in the current financial crisis has been a relatively abstract idea, affecting mainly large financial institutions. Business credit
Economists are watching closely to see if the credit crunch is going to make it harder for small- and midsized business owners to borrow money.
Mortgages
The crisis on Wall Street shouldn’t have a direct impact on people who are paying their mortgages on time.

Read more on What You Need To Know About The Credit Crisis…

From the WSJ:

1. Check that your bank accounts are federally insured. The Federal Deposit Insurance Corporation (FDIC) guarantees deposits up to $100,000 per person. The Securities Investor Protection Corporation (SIPC) guarantees you at places like Lehman Brothers, Merrill Lynch, E-Trade and the like up to $500,000, including $100,000 worth of cash. The same rules apply: If you have more to invest, spread it across multiple firms. 3. Put money in thy purse. The rip-off checking account with the high fees and low interest. Credit is already tight, and it may get a lot tighter still.
5. Refinance your mortgage. No, your Fannie Mae shares aren't "resting." 7. Don't panic. Bah. The stock market is no home for money you may need urgently. It could fall 30% or jump 30%. 9. If you are investing for five years or more, buy some stock. World markets overall have fallen 27% from last year's peak. Invest globally. If you are looking for a value focus, Morningstar analyst Bridget Hughes likes Oakmark Global. 10. If you want to worry about anything, worry about your taxes. (If you think Lehman Brothers was bad, you should look at Uncle Sam). Oh, and if you want a break from worrying about taxes, worry about Treasury bonds.

Read more on Ten Tips For Surviving The Crisis…

Floyd Norris writes:

J.P. Morgan has a glum forecast, and its shares fell 9 percent today.

“Given the potential stress on the consumer from the continued downward pressure on housing prices and the elevated national inventory of unsold homes, management remains extremely cautious with respect to the home equity, mortgage and credit card portfolios.”

Read more on The Credit Squeeze…

Dale writes:

Lenders also appreciate prequalification because they no longer need to depend on real estate agents for referrals. Lenders can advertise that they offer prequalification letters…

There is nothing more important in your financial life than your credit score. This number will influence nearly every decision that is ever made about your ability to apply for and receive credit. About the only thing you can do that is not directly influenced by your credit score is to make savings decisions. However, the more you must spend in interest for loans, the less you will have available to save, so your credit score indirectly affects every aspect of your financial life.

Read more on The Home Mortgage Book: Insider Information Your Banker & Broker Don't Want You to Know by Dale Mayer…