Subprime Woes Subdue Some Winners

Worries about defaults have led investors to shun lenders, but S&P thinks mortgage insurers deserve a closer look

When news of deteriorating credit quality hurting subprime lenders made headlines late last week, investors punished the good, the bad, and the ugly indiscriminately. Standard & Poor's Equity Research believes there's an opportunity to pick up good names that were sold off unfairly last week. But investors should be forewarned: There are still potential pitfalls for many financial firms, as S&P thinks their holdings of new-fangled mortgage products with adjustable rates and flexible payment options could face some hurdles in the coming months (see BusinessWeek.com, 2/14/07, "A Sinking Sensation for Subprime Loans").

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