US Federal Reserve warns of $100bn credit losses due to Bad Credit Mortgage Crisis

Federal Reserve chairman Ben Bernanke has warned that the sub-prime lending market crisis could cost up to $100bn and credit losses associated with sub-prime mortgage failures were “significant”.

Over 100 mortgage companies have now gone bust, closed, seeking bankruptcy protection or have put themselves up for sale.

Defaults on bad credit mortgage in the first quarter climbed to the highest since 2002, according to the Mortgage Bankers Association.

RealtyTrac predicts repossessions and foreclosures are expected to reach 2 million in 2007. More than a million Americans lost their homes last year

It is expected later today George Bush will announce plans to allow government backed mortgage insurer, Federal Housing Administration, to guarantee loans for borrowers who are more than 90 days behind with their payments.
He is also expected to express the need to enforcement of laws strongly against irresponsible lending.