Skagit Real Estate News 4 U

Real Estate News & Commentary by Ed Finlan, November 8th, 2010.

According to an analysis by Weiss Ratings, an independent ratings agency covering the financial sector, JPMorgan Chase, Bank of America, and Wells Fargo each reported more than $20 billion in single-family mortgages currently foreclosed or in the process of foreclosure as of midyear.

In addition, Weiss found that for each dollar these banks held of mortgages in foreclosure, there were an additional $2 in loans in the pipeline that were 30 days or more past due.

According to Weiss, including all foreclosed and delinquent categories, Bank of America has the largest volume of bad mortgages among U.S. banks, with $74.9 billion, while Wells Fargo has the second largest with $68.6 billion.

Other banks, despite their large size, are less heavily exposed to mortgage difficulties. Citibank has $6.3 billion in foreclosures and $19.2 billion in past-due mortgages, or a total of $25.6 billion.

The volume of foreclosures and delinquencies held by other large banks, such as U.S. Bank ($9.5 billion), PNC Bank ($8.9 billion), and SunTrust ($7.3 billion) is even smaller.

Martin D. Weiss, chairman of Weiss Ratings, said, “In addition to the volume of bad mortgages, the vulnerability of each bank to the foreclosure crisis depends on the capital and loan loss reserves it has set aside to cover losses and other factors such as its earnings, liquidity, reliance on less-stable deposits, and the quality of its overall loan portfolio.”

Among banks with $1 billion or more of mortgages already foreclosed or in process of foreclosure, Weiss found that Wells Fargo has the greatest exposure to bad mortgages in proportion to its capital. For each dollar of Tier 1 Capital, the bank has 75.4 cents in bad mortgages, or a ratio of 75.4 percent.

“Considering that many large banks also take other kinds of risks beyond strictly home mortgages,” Weiss said, “these are very large exposures that could directly impact shareholders and even the safety of depositors.”

Reflecting both their exposure to foreclosures and the other economic factors, the JPMorgan, BofA, and Wells all merit a rating of D (“weak”) or lower from Weiss Ratings, indicating vulnerability to financial difficulties and instability if conditions continue to deteriorate.

Home prices expected to slide another 8%
Source: money.cnn.com

It's hard to be optimistic for housing in light of weak sales, sluggish employment, falling prices and robo-signing.

I don't want to sound like Eeyore but I don't think this real estate slide is over yet. I am actually having a good year but I still think things are going to get worse before they get better.