There are major worries about the US mortgage market

Accredited Home Lenders Holding said it had agreed to pass on $2.7bn of money loaned - at a heavy discount - in order to generate some cash.

There are major concerns about the US home lending market. Late mortgage payments are at a record high.

And former Federal Reserve chairman Alan Greenspan said that the worries "were not a small issue".

Markets knocked

Sub-prime lenders provide money to clients with a poor credit history, and the current problems have been sparked by a rise in defaults and bad loans.

These, in turn, have been triggered in part by a relentless rise in interest rates from rock-bottom levels in the past four years, and falling house prices and rates of homebuilding in many parts of the US.

The possibility that growing customer defaults could derail the US housing market, and even push its economy closer to recession, have also knocked global stock markets.

Accredited Home Lenders saw 65% wiped off its value on Tuesday, having lost 28% a day earlier, after it revealed that it might have to raise extra funds, seek debt waivers, cut jobs and put back its earnings announcement.

But its shares rallied on speculation that it would get a cash injection - that the loan sale has delivered.

Another lender, New Century, revealed that US markets regulator the Securities & Exchange Commission was investigating it.

New Century has stopped making loans and its shares have been suspended, with some analysts now predicting bankruptcy

And Countrywide Financial, the biggest US mortgage company, has warned that the current problems would hurt profit in the short term and added that it would cut 108 jobs.

Mr Greenspan said that woes of sub-prime lenders were unlikely to spill over into the wider economy unless housing prices fell again.