KB Homes finalizes numbers, Indymac warn

KB Homes has finalized its writedowns ($255 million) and walkaways ($88 million). Indymac lowered its forecast from $1.35 to $0.97, this is nearly so interesting as some of the reasons they gave for the lowered earnings:

• "An increase in credit costs related to the loan loss provision, secondary market reserve, and marking-to-market delinquent loans held-for-sale and residuals and non-investment grade securities"- Setting aside more money for bad loans and selling bad loans "at market" (presumably for a even greater loss).
• "A reduction in net interest margin related to loans held-for-sale and the thrift investment portfolio due to yield curve inversion and the fact that our loan production mix shifted more toward fixed rate and intermediate term fixed rate loans;" - Making less per loans due to interest rates and the fact that people aren't nearly as willing to take out those more profitable short term ARMs

Credit tightening will be THE significant factor in any downturn, so it watching the lenders is always a good step for market directions. Once they start taking losses the easy money spigot will be shut off.