And if the price of the house is less than the size of the outstanding mortgage debt, the lender will suffer a loss.

The lack of an upturn in non-bank financing, he notes, may simply be because non-bank lenders are suffering a capital shortage of their own.

Evidence showed that lenders had suffered large losses because of faulty or fraudulent appraisals.

A judge held that an auditor was liable when a lender suffered losses after relying on audited financial statements that proved inaccurate.

What could end this lovely state of affairs, in which lenders provide cheap money but suffer virtually no losses from bad credits?

Last September, Newcastle became the focus of the credit crunch when its local lender, the Northern Rock suffered the first run on a bank since the 19th century.

Even if they do not face legal challenges, lenders that receive poor ratings could suffer serious damage to their corporate prestige.

The other lenders suffered losses of more than $10 million.

Along the way, the lenders have suffered through corporate reorganizations, fraudulent accounting and foolish business plans.

However, once the crisis reaches the stage where global lenders suffer significant losses, they will cut back on their loan supply and interest rates for everybody will rise.