The earnings shocks that rattled Aames Financial and Cityscape Financial could spread throughout the home equity and subprime mortgage sector, a report by Standard & Poor's Corp. warns.

Like Aames and Cityscape, subprime lenders in general may be failing to accurately evaluate the quality of their loans, and the underassessments could soon lead to a spate of earnings disappointments and writedowns, the debt rating agency concludes.

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