Wells Fargo Writes Down $1.4B / To Liquidate Assets
Posted by Noah Rosenblatt on November 27, 2007 at 6.03 PM
A: Just out. Wells Fargo is the latest financial institution to announce more write downs and future actions related to the credit crisis. Whats very interesting here is that the company intends to liquidate their riskiest assets, even as the market for these products is in distress. That to me is a clear admittance of lack of faith in the housing / mortgage markets for the near to medium term.
According to CNN Money:
Wells Fargo will take a $1.4 billion provision in the fourth quarter for loan losses, the bank said Tuesday. The portfolio represents about 3 percent of Wells Fargo's loan balance, and the bank said the debt poses the biggest risk to its balance sheet.Wells Fargo stock (WFC: NYSE) is down just under 4% in after hours trading. Again, what is intriguing here is the intentions to liquidate ALL of their riskiest mortgages onto a secondary market that is still seized up. The company's eagerness to sell their holdings at such distressed levels is either a very smart move, or a very desperate one. Let's see how the market reacts to the continuing write downs tomorrow after a nice rebound rally today.In a filing with the Securities and Exchange Commission, the San Francisco-based bank said it will create an $11.9 billion portfolio of the company's riskiest mortgages, which it plans to liquidate. The portfolio consists of three types of home-equity loans, or additional money lent to homeowners who already have mortgages.
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Comments (4)
Whats interesting to me is that I've heard 0 down stated loans, IO etc are still available below Jumbo ... how on earth are these loans still going through?
I don't see prices moving down much until we return to 20% down 3 times income plus a painful financial *probe* ...
Posted by uwsider | November 27, 2007 6:15 PM
yea, me too. Trust me I dont think its happening as much as what we're hearing though.
What I was hearing about was those neg amortizing COFI & COSI loans being sold to struggling buyers & refi's..That could be a MAJOR problem in years to come as principals become higher than the home's worth on the market.
Posted by Noah | November 27, 2007 6:28 PM
UPDATED ADD ON --> Wells said it also will tighten its lending standards across the board in a mortgage market that has significantly deteriorated over the past several months, amid credit worries and increasing loan defaults.
-TheStreet.com
Posted by Noah | November 27, 2007 6:40 PM
uwsider -
I also find that hard to believe about 0 downs, I/Os. Where is the capital coming from to fund all of those new risky mortgage issuances? New CDOs? New SIVs? Commercial banks' devil-may-care balance sheets?
Very difficult to connect the dots on that one.
Posted by them | November 27, 2007 8:45 PM