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McAfee Inc, the No. 2 U.S. security software maker, reported quarterly revenue that missed Wall Street projections as sales to consumers grew at their slowest rate in almost two years.

The company’s shares fell 4.5 percent as the revenue shortfall, which came in the wake of substantially stronger-than-expected earnings from bigger rival Symantec Corp, overshadowed better-than-expected profit.

McAfee on Thursday reported profit, excluding items, of 62 cents per share, in the third quarter ended September 30, above the average forecast of 60 cents, according to Thomson Reuters I/B/E/S.

Revenue rose 18 percent to $485 million, below the $487 million average analyst forecast.

Sales of McAfee’s consumer software rose 8 percent from a year earlier to $177 million. It was the slowest rate of growth since the fourth quarter of 2007.

Its corporate business reported a 25 percent sales increase, posting quarterly revenue of $308 million.

Investors closely watch sales of consumer software because analysts say that such products are more profitable than programs for businesses. The company does not disclose the profits of each division.

McAfee also said that it has agreed to pay No cash till payday advance. 2 PC maker Dell Inc to recommend its security software to its customers worldwide for at least the next two years. McAfee has the right to extend for a third year.

“This relationship is very profitable for McAfee,” said Chief Executive Dave DeWalt, who has negotiated deals with other PC makers that have boosted sales of consumer software in previous quarters.

Those sales grew at a year-on-year rate of 13 percent in the second quarter and 12 percent in the first quarter.

The company forecast that it will report fourth-quarter profit, excluding items, of 61 to 65 cents per share on revenue of $505 million to $525 million. Analysts expect McAfee to post profit of 63 cents per share on revenue of $507 million.

Net income fell 25 percent to $37 million, or 23 cents per share, from $49 million, or 31 cents, a year earlier.

McAfee shares fell 4.5 percent to $41.80 from their New York Stock Exchange close of $43.75.

(Reporting by Jim Finkle, editing by Leslie Gevirtz)

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A major investor in convicted swindler Bernie Madoff’s Ponzi scheme drowned in his swimming pool in Florida after a heart attack, his attorney said Monday, and the medical examiner’s office confirmed the report.

Jeffry Picower, 67, was found unconscious in his pool shortly after noon Sunday at his Palm Beach, Fla., home by his wife, Palm Beach police said. He was pronounced dead at Good Samaritan Hospital.

Picower’s attorney, William Zabel, told CNN that Picower drowned after suffering a massive heart attack. Sue Jaffe, spokeswoman for the Palm Beach County medical examiner, confirmed those details.

In September, Forbes Magazine ranked Picower number 371 among the 400 richest Americans, with a net worth of $1 billion.

In March, Madoff was convicted of operating a Ponzi scheme and defrauding thousands of investors, and was sentenced to 150 years in prison after pleading guilty to 11 felony counts of fraud, money laundering and perjury. Prosecutors have said it was the largest investor fraud ever committed by a single person, totaling billions in losses to investors.

When the Picower Foundation of Palm Beach announced it was shutting down early this year because of Madoff losses, it initially appeared that the prominent philanthropist had been an unfortunate victim of Madoff’s Ponzi scheme. Picower’s 2007 tax return had valued his foundation’s portfolio at $955 million.

However, in May, court filings by Madoff trustee Irving Picard changed the picture. The trustee’s complaint claimed that Picower had been a key beneficiary of Madoff’s Ponzi scheme for more than 20 years, and "knew or should have known that [he] was profiting from fraud because of the implausibly high rates of return" on his accounts payday advance lender.

Those "anomalous and astronomical rates of return" — as high as 500% in one year and 950% in another year — "were neither credible nor consistent with legitimate trading activity, and should have caused any reasonable investor … to inquire further," the court filings said, referring to Picower as "a sophisticated investor, accountant and lawyer."

Citing backdated account filings and other bogus paperwork, the complaint contends that "Picower and the other defendants also knew or should have known that they were reaping the benefits of manipulated purported returns, false documents and fictitious profit."

The Picowers recently told The New York Times that the publicity and controversy surrounding their connection to Bernie Madoff had been a great source of heartache.

"We always have been private people, and having all this play out in the media has taken a big toll on our health," the couple wrote in response to questions posed by reporters. "We feel stunned, betrayed, angry, sickened, devastated," they said, and were only able to draw strength and consolation "from each other and from the knowledge that we did nothing wrong."

– from CNN’s Mythili Rao 

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Washington launched its biggest offensive yet against Wall Street pay practices Thursday, taking aim at everyone from senior executives to high-flying traders of complex securities.

Leading the charge was the White House, which outlined a series of drastic pay cuts for 136 top executives at the nation’s biggest bailed-out companies, including AIG (AIG, Fortune 500), Citigroup (C, Fortune 500) and Bank of America (BAC, Fortune 500).

Separately, the Federal Reserve proposed a review of pay practices at 28 of the nation’s largest banks to make sure employees are not tempted to make the kinds of risky bets that helped sink firms such as Lehman Brothers.

Much of Thursday’s focus, however, was on the ruling issued by White House "pay czar" Kenneth Feinberg, who has been actively reviewing pay plans for top executives at the seven biggest bailout firms — AIG, Citigroup, Bank of America, General Motors, its former finance arm GMAC, as well as Chrysler and Chrysler Financial.

Among other things, Feinberg demanded that each of the bailed-out companies reduce total compensation for their top 25 highest-paid employee by 50%, on average.

Much of the cutting was done to executives’ salaries, which were reduced more than 90% on average.

The pay restrictions announced Thursday will not take effect until Nov. 1, and will serve as a base for executive pay in 2010.

President Obama, who appointed Feinberg to assess compensation practices at these seven companies in June, praised his ability to strike a balance between protecting American taxpayers’ massive investment in these companies while allowing them to return bailout money.

"I believe he’s taken an important step forward today in curbing the influence of executive compensation on Wall Street while still allowing these companies to succeed and prosper," Obama said at a White House event honoring veterans.

Feinberg and the Fed

Thursday’s actions by the White House and regulators certainly represent an unprecedented level of government oversight into how employees on Wall Street and in corporate America in general are paid.

Certain shareholder groups and other social activists have long campaigned for banks and other financial firms to do more to align executive pay with a company’s performance. But those efforts have either failed to build a critical mass or met resistance among company board members.

Under the White House’s newest restrictions, executives will prevented from collecting extravagant cash bonuses. Instead, they will take incentive pay, as well as part of their salary, in the form of company stock, which they will be unable to sell until 2011 at the earliest.

On a company basis, the 22 executives at Citigroup stand to receive the biggest pay packages among the seven firms, collecting pay packages worth an estimated $118.4 million after taking into account salary, options and restricted stock and options that will vest over the next four years.

Recently hired AIG CEO Robert Benmosche will be the highest paid employee, collecting $10.5 million, including $3 million in salary, $3.5 million bonus and $4 million in stock options. (3 AIG execs get bonus OK from pay czar)

Names of other highly paid employees were not disclosed, however. The Treasury Department has indicated it won’t disclose names of the employees that are being reviewed — or the specifics of their payment plans — without an individual’s approval.

The Federal Reserve program, while bold, is expected to take a much more delicate approach. While pay practices for employees at many different levels will go under review, the central bank does not plan to impose limits on pay.

"The Federal Reserve is working to ensure that compensation packages appropriately tie rewards to longer-term performance and do not create undue risk for the firm or the financial system," Fed Chairman Ben Bernanke said in a statement.

Unintended consequences?

Some compensation experts have warned that actions taken by the Obama administration could have a disastrous series of unintended consequences, including the loss of top employees to companies that are not hindered by government restrictions.

Bailed-out firms such as Citigroup and Bank of America have already lost dozens of key employees to rivals such as JPMorgan Chase (JPM, Fortune 500) and Goldman Sachs (GS, Fortune 500), both of which got out from under the government’s thumb over the summer.

A spokesman for Bank of America said Thursday that competitors were already "exploiting this situation" and will continue to, offering top employees compensation that was twice as much or more in some instances.

Last week, outgoing Bank of America CEO Ken Lewis said he would not accept a salary or bonus for 2009, and the bank said the decision came after Feinberg "suggested" it to Lewis.

There have also been fears that letting talented employees leave could derail efforts aimed at nursing these companies back to health and ultimately returning bailout money to taxpayers.

The reaction to Thursday’s ruling by Feinberg among the automotive-related companies was much more muted.

In a statement, GMAC called the process "fair" and "constructive," noting it would allow them to retain key talent needed to restructure the company.

The next step

With compensation for top executives and other high-ranking employees in place, Feinberg will now move on to review pay packages of the next 75 most highly paid employees at each company.

All seven firms were due to deliver those plans to Feinberg’s office last week. Once those are determined "substantially complete," he will have 60 days to complete his review of those 525 employees.

That could delay Feinberg’s next ruling until late December or early next year.

It certainly stands to reason that additional cuts could be forthcoming. It is not unheard of on Wall Street for star traders or dealmakers to be in line for pay packages that eclipse that of senior management.

Still, it is not clear whether Feinberg’s authority will extend to all 100 top-paid employees at each firm. When the Treasury Department announced Feinberg’s appointment in June, it indicated that his authority would not extend to those employees making less than $500,000 in total annual compensation.

–CNN’s Jessica Yellin and Laura Batchelor, and CNNMoney.com senior writers Jennifer Liberto and Peter Valdes-Dapena contributed to this report. 

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Iran has always adhered to its implied output target under OPEC’s existing output curbs and has not violated its commitments, its OPEC governor Mohammad Ali Khatibi told the semi-official Mehr news agency on Saturday.

The most recent Reuters survey of oil firms, OPEC officials and analysts showed Iran, the group’s second-largest producer, pumped 430,000 barrels above its OPEC target in September, the most in absolute terms of any member.

“Iran has always been committed to crude production quotas set by OPEC and there has never been any violation by Iran in this respect,” Khatibi said.

Khatibi said reports by the International Energy Agency (IEA) and other secondary sources are based on “guesswork and not reliable.”

“The point to be noticed is that the figures reported by these sources are completely incompatible with one another.”

OPEC agreed late last year to lower supply by 4.2 million barrels per day (bpd) as recession curbed fuel use and led to a slide in prices.

But the Reuters survey showed the group met 63 percent of promised cutbacks in September, down from 68 percent in August, continuing a trend of rising output that shows some members have relaxed adherence amid higher oil prices.

Iran has long been one of the group’s members most interested in higher prices.

The world’s fifth-largest crude exporter has struggled for years to develop its oil and gas reserves and now has to contend with an international lack of credit, as well as the U.N. nuclear sanctions over its disputed nuclear program.

SANCTIONS

A report by a parliamentary research center, published on Saturday by Iran’s Aftab-e Yazd daily, said Iran’s crude oil exports will “drop to zero” in eight years in the absence of an annual $4.5 billion in investment in the oil sector.

The authorities blame sanctions for the lack of foreign investment in the country’s energy sector.

Iran also lacks sufficient refining capacity to meet its domestic demand and imports up to 40 percent of its gasoline requirements.

It subsidizes gasoline, which is therefore among the world’s cheapest, encouraging fast growth in demand and making it very reliant on imports from international markets.

However, Iran’s deputy oil minister Noureddin Shahnazizadeh said gasoline production had increased in the country. 

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The U.K. economy probably grew for the first time in more than a year in the third quarter as a pickup in manufacturing and service industries ended the worst recession since World War II, a survey showed.

Gross domestic product probably rose 0.2 percent in the three months through September after contracting 0.6 percent in the previous quarter, according to the median of 33 forecasts in a Bloomberg News survey. The Office for National Statistics releases figures at 9:30 a.m. in London.

U.K. officials are showing little willingness to rein back stimulus measures even as the economy starts to rebound. Chancellor of the Exchequer Alistair Darling said this week he will focus on cementing the recovery in time for a general election due by June. Bank of England Governor Mervyn King said Oct. 20 there should be no illusion that a return to growth will be smooth. Policy makers will decide in two weeks whether more bond purchases will be necessary to boost growth.

“A figure of 0.1 or 0.2 isn’t a big deal, because even that won’t be enough to start shrinking the spare capacity in the economy,” said Colin Ellis, an economist at Daiwa Securities SMBC in London and a former central bank official. “That’s what matters in the medium term for inflation. They should do more QE in November.”

The GDP data is the first for the third quarter from a Group of Seven nation. Central banks in Canada and Italy both forecast slumps in their economies ended in the same period, and the U.S. probably also returned to growth then, according to the median forecast of economists in a Bloomberg News survey.

France, Germany and Japan exited their recessions in the second quarter.

‘Well Below’

The economy’s output is still “well below” the levels of a year earlier and there should be no illusion of a “smooth and painless” return to sustainable growth, King said on Oct. 20. Officials said at their Oct. 8 meeting that improvements in conditions for banks are of limited significance and there is still a danger of further losses.

“More than six months out, there’s no question we’re going to have to reverse the extreme policy measures we took,” Posen said in an interview with BBC Radio Scotland broadcast today. “The question is what point is the economy ready to sustain, on a private-sector basis, the recovery. There’s legitimate discussion and differences as to how close we are to that.”

Recovery

Credit losses and writedowns worldwide now total $1.6 trillion. Lloyds Banking Group Plc and the government are weeks away from an agreement on whether the lender can escape a program to insure up to 260 billion pounds of potentially toxic assets, a person familiar with the matter said yesterday.

Prime Minister Gordon Brown is looking to the recovery for respite as his ruling Labour party struggles to erode the poll lead held by David Cameron’s Conservatives. The opposition party had a 17 percentage-point gap over Labour in an ICM Research poll for the Guardian newspaper published on Oct. 21.

The economy will contract 4.4 percent this year and then expand 1.3 percent in 2010, according to forecasts released this week by the National Institute of Economic Research.

Unemployment may keep rising even after the end of the recession as a lagged effect of the slump. St. Ives Plc, the U.K. printer of the Economist and Vogue magazines, has shed about 12 percent of workforce, Finance Director Matt Armitage said on Oct. 19.

Niesr says that the Bank of England should pause its bond- purchase program at the Nov. 5 decision, when officials will have revised forecasts on the economy. The British Chambers of Commerce has called for a further expansion of the plan to reach 200 billion pounds to secure the recovery.

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Just as federal officials seek to wind down many bailout programs, the Obama administration announced Monday yet another initiative to prop up the housing market.

Administration officials unveiled a plan to aid state and local housing finance agencies, which provide mortgages to first-time and lower-income homebuyers and enable the development or rehabilitation of rental properties. Officials declined to put a pricetag on the program, but said there would be no cost to taxpayers.

"This initiative is critical to helping working families maintain access to affordable rental housing and homeownership in tough economic times," said Treasury Secretary Tim Geithner.

Under the initiative, the Treasury Department, along with Fannie Mae (FNM, Fortune 500) and Freddie Mac (FRE, Fortune 500), will purchase housing bonds issued by the finance agencies. This will give the groups the funding needed to make new loans. Also, the government will provide a temporary credit program to allow the agencies to refinance their existing bonds to more favorable terms.

The measure will enable housing agencies to lend to hundreds of thousands of families and enable the development or rehabilitation of tens of thousands of rental units, administration officials said. The agencies operate in all 50 states and in many cities.

The agencies will pay fees to participate in the program, which officials say will cover its cost. They are still working with the agencies to determine the extent of support needed. Earlier news reports said the initiative could cost as much as $35 billion no fax no teletrack payday loan.

The finance agencies have had a tough time funding mortgages since the bond markets went haywire last year. As a whole, they are operating at only 20% to 25% of their usual capacity, with some groups halting their lending completely, said Susan Dewey, president of the National Council of State Housing Agencies.

While the administration says the program comes at no cost to taxpayers, the Treasury Department is ultimately responsible if an agency defaults on its debt payments.

The agencies have a good track record. They generally make 30-year, fixed-rate mortgages and require full documentation. The delinquency rate on agency mortgages is comparable to that of prime loans given to homeowners with good credit backgrounds, according to administration officials.

While the government is starting to pull back its support of the banking industry, officials said it is too early to tell when it will withdraw from the housing market. Congress is considering extending an $8,000 tax credit for first-time homebuyers, which ends next month.

The credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, by the end of November, according to estimates by the National Association of Realtors. 

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The dollar was mixed against major rivals on Thursday following better-than-expected economic data about inflation and jobless claims.

The dollar surged 1.32% against the yen to ¥90.60, but slid against the euro and the pound to $1.4932 and $1.6260, respectively.

"Even though equities turned sour [earlier] today, strong economic data fueled the recovery story and risk appetite in the U.S. and drove the dollar lower against high yielding currencies," said Kathy Lien, director of currency research at Global Forex Trading. "Whenever you factor in risk appetite, investors take money out of lower currencies." Equities advanced in the afternoon and finished high, with the Dow closing above 10,000 for a second day in a row.

The government released a tame inflation report on Thursday, which showed that although the Consumer Price Index is down, the core CPI, which excludes food and energy prices, edged slightly higher than expected.

The Labor Department’s report on initial jobless claim showed a surprise drop in the number of U.S. workers filing new claims for unemployment insurance.

Despite the better-than-expected data, Lien said the dollar will continue to remain under pressure.

"There are more reasons to sell the dollar than buy it, and all of the reasons will hold through the end of the year," Lien said, adding that dollar has been declining because the Federal Reserve has kept interest rates near zero and "it’s more and more likely that the Fed will be the last central bank to tighten monetary policy."

Lien added that the dollar fell aggressively last month, and over the last decade, the dollar has continued its September trend 70% of the time in the three months following. 

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Iraq’s cabinet ratified a contract with BP and China’s CNPC to develop the super-giant Rumaila field, the first major new oilfield deal signed since the 2003 U.S. invasion, a senior licensing official said on Saturday.

Separately, Iraqi oil officials are in talks again with Royal Dutch Shell on revising its offer to operate the Kirkuk oilfield, after Europe’s biggest oil company failed to win the license in Iraq’s first bidding round in June.

Cabinet approval for the BP contract, which came late on Friday, sends “a strong signal” to other international oil companies seeking contracts to develop Iraq’s vast hydrocarbon resources, Abdul-Mahdy al-Ameedi, deputy director of Iraq’s Petroleum Contract and Licensing Directorate, told Reuters.

“We believe that we have a strong pillar now for our work toward realizing our plans,” he said in Istanbul, where Iraqi officials are meeting oil majors in a workshop on a second auction of oilfield contracts planned for December.

The oilfield contracts tendered this year are a central plank of Iraq’s aspirations to more than triple current oil production of 2.5 million barrels per day and catapult itself to third place from 11th in the league of oil producing nations.

The Iraqi Oil Ministry says that cabinet has the final say on the contracts, but some lawmakers insist that deals must also be sent to parliament for approval. An oil law to establish a framework for foreign investment has been delayed for years.

Analysts have said there are no guarantees contracts will be considered legal by future Iraqi governments, pointing to deep rifts among politicians over control of oil wealth. The next election is due to take place on January 16, 2010.

WORKHORSE

BP and CNPC were the only successful bidders in the first round at the end of June. The contracts on offer in both rounds are aimed at reviving the oil sector after the invasion and years of sanctions and under-investment.

Rumaila is the workhorse of Iraq’s oil industry, with capacity of 1.1 million barrels per day (bpd). Reserves are estimated at 16.998 billion barrels.

Production at Rumaila is expected to reach 2.8 million bpd after six years, Ameedi said. Iraq’s total output, including giant fields at Zubair and West Qurna, should be more than 7 million bpd by then, he said.

Shell representatives and Iraqi officials, meanwhile, have held fresh talks to negotiate a service contract for the oilfield of Kirkuk, Ameedi said. At the first auction of oilfield contracts in June, Shell balked at accepting the low $2 per barrel fee that Iraq was willing to pay for operating the field.

“We are concerned about the technical proposal, about the remuneration fees. All these things are being discussed,” Ameedi said.

Iraq has reduced taxes and improved terms to make deals more profitable after the lacklustre response in June’s auction.

Earlier this month, a consortium led by Italy’s Eni crept closer to inking a deal to develop Zubair, yet to be signed, and Iraqi officials have said they are close to agreeing on a service contract for West Qurna. 

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Congress is considering proposals to greatly expand a soon-to-expire $8,000 tax credit for first-time homebuyers — potentially applying it to all but the wealthiest homebuyers.

Supporters say doing so would further boost home sales, stabilize housing prices and generate jobs. Opponents say extending and expanding the credit would be a waste of money and only temporarily stave off further price declines.

The credit now can be claimed by anyone buying a home who has not owned one for three years and who closes the deal by Nov. 30.

Beyond extending that deadline, some lawmakers want to make the credit available to all homebuyers who meet income eligibility requirements. And some want to increase the amount of the credit from $8,000 to $15,000.

Currently the first-time home buyer credit is available in full to those buying their primary residence who make $75,000 or less ($150,000 for joint filers). A partial credit is available to those making between $75,000 and $95,000 ($150,000 to $170,000 for joint filers).

The case for expanding the credit

Through mid-September, 1.4 million tax returns had qualified for the credit, according to the IRS.

Some portion of those returns, which the IRS couldn’t specify, represents buyers who took advantage of an earlier version of the tax credit, which was only worth $7,500 and has to be repaid over time.

By the end of November, the credit will have been used by 1.8 million homebuyers, at least 355,000 of whom would not have bought a house without the tax break, according to estimates by the National Association of Realtors.

Mark Zandi, chief economist of MoodysEconomy.com, favors extending the current credit until June 1, 2010, and making it available to all home buyers regardless of income or at least to everyone except those at the highest end of the income scale. He estimates the cost of doing so wouldn’t exceed $30 billion over 10 years.

Zandi’s reasoning: Foreclosures are expected to rise next year because of rising unemployment, and that will drag home prices down further. Extending and expanding the credit will help mute that decline. And by June, there’s a chance the job market will have stabilized.

"The most fundamental argument for the credit is that nothing works in the economy if housing is falling — it hurts household wealth and credit becomes tight," Zandi said. "[The credit] is a good insurance policy. It’s vital to stem the housing price declines."

To kick start economic activity, Zandi believes lawmakers should set aside an amount of money for an extended credit and tell potential home buyers "first come first served."

The National Association of Home Builders would like the credit extended for all of 2010.

"We estimate that this would increase home purchases by 383,000 in the next year and help mitigate the foreclosure crisis by whittling down inventory," NAHB Chairman Joe Robson said in a statement. "This stimulus alone would create nearly 350,000 jobs over the coming year, which is exactly what the economy needs right now."

A study funded by the industry-supported Fix Housing First Coalition found that the current credit helped stimulate demand for homes at the lower end of the price spectrum.

"An expansion of the tax credit would spur an increase similar to what occurred in the lower end of the market, by motivating buyers in the ‘trade-up market’ to purchase a higher priced primary home," said Kenneth Rosen in testimony before Congress. Rosen runs the consulting group that conducted the study and is chairman of the Fisher Center for Real Estate and Urban Economics at the University of California in Berkeley.

The case for letting the credit expire

Opponents of extending and expanding the credit worry that such moves offer poor bang for the buck and won’t stem housing declines.

"Everything spent on this program will ultimately have to be paid for later through higher, economically harmful taxes," Ted Gayer, co-director of economic studies at the Brookings Institution, wrote in a Brookings blog.

Assuming there are 5.5 million home sales in 2010, Gayer said, expanding the credit to all homeowners "is poorly targeted because it would give a credit to 5.5 million homebuyers who would have bought a home anyway."

The current credit was estimated to cost federal coffers $6.64 billion over 10 years. But Gayer notes that the cost is likely to be much higher since more people than expected took advantage of it but only about 15% of people wouldn’t have bought a house otherwise.

It would cost an estimated $16.7 billion if the credit is extended until the end of June 2010 and made available to single filers making up to $150,000 and joint filers making up to $300,000. Those are the parameters that Sen. Johnny Isakson, R-Ga., and Sen. Chris Dodd, D-Conn., are proposing in an amendment they introduced to a bill the Senate is expected to take up this week. (Please see correction.)

Another argument against an extension: It would only temporarily boost home prices and potentially set up those using it for a fall. That’s because home prices are likely to decline once the credit expires and interest rates ultimately trek north, according to Dean Baker, codirector of the Center for Economic and Policy Research.

"Temporarily propping up house prices, so that a new set of homebuyers can incur losses, is a policy of questionable merit," Baker said in a CEPR column.

The sooner the market adjusts the better, Baker said. He did offer one caveat: "We may want to step in to prevent prices from overshooting on the downside in a select group of markets where this is a real possibility."

Zandi said that’s already happened in a number of markets, and that an extended credit might help turn around the deflationary psychology in those markets where buyers are worried about catching a falling knife.

- CNNMoney.com’s Les Christie contributed to this report.

Correction:This article originally misstated Sen. Isakson’s home state.  

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U.S. consumers are increasingly late paying off loans on their primary home, as the highest unemployment in a quarter of a century pushes up delinquency rates on home loans and most other types of loans, according to a monthly report by the Equifax credit bureau.

“Every major consumer product line, in terms of delinquency, is up again, except for (credit) cards,” said Dann Adams, president of U.S. Information Systems.

Among U.S. homeowners with mortgages, a record 7.65 percent were at least 30 days late on payments in September, up from 7.58 percent the previous month. The rate of delinquencies is more than double the 3.55 percent rate in September 2007, according to Equifax.

The rate of subprime mortgage delinquencies rose slightly to 41.36 percent. Early-stage delinquencies are an initial warning sign of potential future defaults, which in turn drive home foreclosures. The large supply of bank-owned homes reaching the market has helped prevent a strong recovery in prices.

Home equity and auto loan delinquencies also rose, both sequentially and from a year ago, but delinquencies on student loans have held steady during the recession.

Demand for student loans is soaring, up 15 percent from a year ago, as more people stay in school longer or go back to school to improve their job prospects. It is the only area where credit is expanding.

“We’ve never seen this dramatic growth before,” Adams said about student loans.

BORROWERS FALL BEHIND

Data for the credit trends report is based on Equifax’s more than 200 million files of U.S. consumers using credit.

A notable characteristic of the current economic downturn is that, unlike in past recessions, borrowers are more likely to fall behind on multiple types of credit, rather than just one or two.

Many households are staying current on credit cards and auto loans rather than on other types of loans, because cards carry higher interest rates and are a last resort pay for necessities.

For some, the burden is too much. Personal bankruptcies continue to rise, up 40 percent from a year ago. Filings of 1 million so far this year are approaching 2008’s total of 1.1 million.

Meanwhile, the U.S. jobless rate — at 9.8 percent, the highest since 1983 — is both causing consumers to seek out less credit, and lenders to offer fewer loans to limit risk.

NERVOUSNESS OVER JOBS, HOME PRICES

Consumers have become so leery of debt that total consumer debt has fallen by more than $440 billion, or 3.8 percent, from its peak in the third quarter of 2008, to about $11 trillion. 

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