Not long after information bearing the actual extent of the damage caused to the Gulf Coast region by Hurricane Katrina began to hit investors on Wall Street, mortgage lenders, insurers and others, did the conversation turn to the future - and what natural disaster, and where, could hit next.

The specter of a massive earthquake in the state of California came to mind. Unlike regions along the Mississippi and Louisiana coast lines, even within the New Orleans metropolitan area, where mortgages are smaller and fewer and farther between, a natural disaster of the scope of Hurricane Katrina could have the ability to cause more than a blip in all sorts of mortgage portfolios. Particularly in the subprime mortgage arena, lenders such as Accredited Home Lenders, Ameriquest Capital Corp., Countrywide Financial Corp. and New Century Financial Corp. are not only based in the region, but count Californian customers as, on average, 20% of their books of business.

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