Paperstand

The WSJ’s „Heard on the Street” out saying that as more homeowners skip out or fall behind on their mortgage payments, some lenders have started tightening their underwriting standards. That may not be enough to save them from losses. Mortgage lenders, such as Countrywide Financial (CFC), Downey Financial (DSL) and FirstFed Financial (FED), try to avoid risky "subprime" borrowers, have become more cautious about who they lend to in general, and are setting aside more reserves for potential defaults. But the increasing popularity of 2nd mortgages could end up undermining their efforts. "Mortgages that have a 2nd mortgage behind them run a far higher risk of default," says Zach Gast, of Center for Financial Research & Analysis.

Barron’s Online “Inside Scoop” section reports that veteran bond trader John Devaney is charging into CompuCredit (CCRT) as the sub-prime lender rebuilds credibility with investors. Devaney purchased roughly 276K shares of CompuCredit for $10.5m.

Sharesleuth.com reports that Xethanol’s (XNL) partner in developing ethanol projects in New England has terminated their joint venture, citing concerns about the co and its technology. Global Energy notified Xethanol of the decision late last week. Lee R. Tyrol, a principal of Global Energy, also resigned as manager of the partnership, called NewEnglandXethanol. Tyrol confirmed the termination to Sharesleuth.com on Friday.