Dow and Nasdaq slip on consumer spending worry

After Forts received a foreclosure warning in October, Brennan connected her with Genie McGee, a reverse-mortgage specialist with Financial Freedom Senior Funding Corp., an Irvine, Calif., unit of IndyMac Bancorp Inc. She determined that Forts would qualify for a reverse mortgage of about $61,000.

Brennan sent Fremont's loss-mitigation department a letter proposing that the company agree to take that sum and cancel its plans to foreclose on the house. On Dec. 3, the day before the foreclosure sale was supposed to take place, Fremont agreed to the deal and stopped the foreclosure.

The transaction illustrates one of the biggest challenges in getting lenders to accept payouts from reverse mortgages: taking less money than the house may be worth. In the 14 cases Brennan has settled to date, lenders have accepted payments for an average of 65 cents on the dollar. read more

European Stocks Recover as Bid Talk Picks Up

Federal Reserve Chairman Ben Bernanke told Congress on Thursday the economy is deteriorating and signaled a readiness to keep lowering a key interest rate to shore things up.

Bernanke also told the Senate Banking Committee that the one-two punch of housing and credit crises has greatly strained the economy. And he forecast sluggish growth in the near term, noting that hiring has slowed and that people are likely to tighten their belts further because of high energy prices and plummeting home values.

The outlook for the economy has worsened in recent months, and the downside risks to growth have increased, Bernanke said. To date, the largest economic effects of the financial turmoil appear to have been on the housing market, which, as you know, has deteriorated significantly over the past two years or so.

Bernanke also told senators that the virtual shutdown of the market for subprime mortgages given to people with blemished credit histories or low incomes - and a reluctance by skittish lenders to make jumbo home loans (those exceeding $417,000) - have aggravated problems in the housing market. read more