Financials Describe the Status of Mortgages and Lending

Washington Mutual, Inc. Q2 2008 Earnings Call Transcript. John McMurray, EVP, CRO: “Subprime was the first to surge and we’re starting to see early indications of that perhaps slowing, home equity was the second sub-portfolio to surge within residential and then most recently in the primary it’s been particularly in the option ARM area. What we’ve seen recently there is a continued acceleration… There are some cases where [charge-offs] may occur earlier than 180 days and then subsequent to 180 days we’re going to re-evaluate those NPLs or in the case of an REO in the first 90 days... So a significant portion of the charge off activity that you’ve seen for us in the last couple quarters is not the initial charge off but re-evaluations of loans moving through the foreclosure process. Thomas W. Casey, EVP, CFO: “We’re seeing… late stage delinquencies, consumers that are getting down two payments are having less and less capability to refinance or to sell their home and so those are going to 180 days.” (Seeking Alpha, July 23^rd) 

Wachovia Corp. Q2 2008 Earnings Call Transcript. “Pick-a-Pay non-performs were up $2.4 billion, and end of the quarter it was about $7B. Of that $7B representing nearly 60% of the company's total non-performing loans. The nature of the Pick-a-Pay non-performing balances… are such that we would expect they will continue to rise given… how long it takes to get that property through foreclosure, that's where we can take quite... actually take action... And I would expect that going forward, we will continue to see some of that trend. Commercial real estate residential related NPA is worth about $500m for the quarter ending at about $1B and non-performs in other loan portfolio generally showed modest increases.” (Seeking Alpha, July 22^nd)

SunTrust Banks Inc. Q2 2008 Earnings Call Transcript. “Tom Freeman, CRO: Delinquencies overall are up modestly. For Alt-A, the high risk portion of our residential mortgages, balances declined, and credit performance ratios improved, which is notable given the shrinking denominator in the calculations. Balances are declining on each sub portfolio except the core which is primarily composed of prime loans. Decline is most notable in the home equity line portfolio. This declined 17% versus last quarter due to repayments on lower production. Combined Alt-A balances have declined -- combined Alt A balances declined by 6% in the quarter, while combined non- accruals held relatively stable and delinquency rates declined. Delinquency for the core portfolio increased by 13 basis points; however, the overall performance of this book remains good with the portfolio continuing to perform favorably compared to external indices for prime… There are no sub-prime loans. There are no option arms or other negative amortizing loan products in our portfolio.” (Seeking Alpha, July 22^nd)

Bank of America Corporation F2Q08 (Qtr End 06/30/08) Earnings Call Transcript. “Joe Price, CFO: In our consumer real estate business primarily home equity continued to deteriorate from Q1... The problems to date have been centered in higher CLTV home equity loans particularly in states that have experienced significant decreases in home prices… Our largest concentrations are in California and Florida, which represents 41% of the home equity portfolio but 63% of the losses. Home equity net losses increased to $923 million or 3.08% up from 1.71% in the prior quarter. Thirty-day performing delinquencies decreased six basis points to 1.27%... Consistent with the prior quarter 82% of net charge-offs related to loans where the borrower was delinquent and had little or no equity in the home. Loans with greater then 90% CLTV on a refreshed basis currently represent 35% of loans versus 26% in the first quarter… Now like others in the industry a large piece of the deterioration is centered in acquired portfolios not originated through the franchise; a practice we discontinued in Q2’07.” (Seeking Alpha, July 21^st)

West Coast Bancorp F2Q08 (Qtr End 6/30/08) Earnings Call Transcript. “The home equity portfolio of lines and loans totaled about $250 million at quarter end. Consistent application of fundamental underwriting disciplines has produced a steady performance from the home equity portfolio over time. Originations are only generated through branch channels... Credit approvals are based on verified income and appropriate debt-to-income levels...  Approximately 78% of all home equity loans have original loan-to-values of 80% or less. The bank has a first lien position on about 36% of all home equity lines and loans with the remaining 64% of loans in the second lien position…. Delinquencies 30 to 89 days past due as of June 30 were four basis points of total home equity loans. Year-to-date net charges offs amount to one basis point and non-accrual home equity loans were 11 basis points of the total home equity portfolio.” (Seeking Alpha, July 21^st)

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