August 6, 2007 (LPAC)--Mortgage lenders Wells Fargo and Wachovia banks are raising interest rates and imposing stricter standards on their most-credit worthy borrowers. Wells Fargo announced it would curb its financing of Alt-A loans (the middle level of borrowers who have good credit ratings but undocumented income), or to buyers of second homes, on Aug. 3. Wachovia Bank, based in Charlotte, NC, announced it would end loans made through mortgage brokers and smaller lenders, and curtailed some Adjustable Rate Mortgages (ARMs).

Credit Suisse Group also told lenders who sell it loans that until further notice, it would purchase no subprime loans, second mortgages (home equity loans), or option ARMs whose payments increase a loan's principal, nor adjustable-rate mortgages with only two or three years of an introductory fixed rate.

Demand is plunging for home-loan securities not guaranteed by U.S. government-associated agencies Fannie Mae, Ginnie Mae, or Freedie Mac. These companies guarantee about 40 percent of U.S. residential mortgage debt, the International Herald Tribune reports. Only $11.2 billion on bonds not guaranteed by the above agencies were sold in July, down from $41.6 billion in June, and a monthly average of $86.6 billion for 2007.