DECLINING HOME PRICES CAUSE STOCK MARKET SELL-OFF. The news yesterday that many home owners with good credit ratings are defaulting on their mortgages led to the biggest one-day drop in the S&P 500 in five months. Home prices are down 2.1 percent from a year ago, after rising 11 percent between 2005 and 2006. This is proof that housing insecurity is being felt far beyond the unstable subprime mortgage market, which preys on indebted buyers who cannot afford regular mortgage payments. Also risky are adjustable-rate mortgages and second mortgages, both of which are far more common, and indicative of the pinch working- and middle-class Americans are feeling across their financial lives. --Dana Goldstein
