Thursday, February 12, 2009
Wells Fargo Is Effectively Insolvent
Two smart and meticulous financial analysts - Reggie Middleton and Mish - argue that Wells Fargo is insolvent.
In yesterday's update to his June 11, 2008 analysis, Reggie shows that the lion's share of Wells Fargo's assets are in mortgages in the California, Florida and Arizona markets, which are all tanking. He concludes:
Wells Fargo has an impaired balance sheet. Marking mortgage assets ANYWHERE near what they are worth results in insolvency.
Mish, who has also been covering Wells for a long time, wrote on February 2nd that Wells is drowning in loan defaults, and has hidden staggering amounts of toxic losses off of its balance sheets, just like Citigroup:
[Despite its claim that it is saving mortgages by reworking their terms,] 30% of Wells Fargo's reworked mortgage loans are 90 days past due or longer, one year after loan modification. ***
Wells Fargo claims it is "well capitalized". Is it? By what measure? What is hidden off its balance sheet that we do not know enough about? Can anyone believe what any financial institution says when it is perfectly clear all these games are being played?
It's not just Citigroup and Bank of America that are in trouble . . . other big banks like Wells Fargo are also on the ropes.
JP Morgan is by far the largest holder of derivatives, and thus has tremendous exposure.
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It may appear as Wells Fargo may have escaped the mortgage mess unlike its rivals. But look closer….The company is viewed as strong and smart for not taking risks like WAMU, Country wide and others. But that perception may be coming to an end. The patterns are starting to emerge pointing to large liabilities….
ReplyDeleteSeveral Lawsuits alleging Wells Fargo involvement in fixing appraisals and manipulating home values through its subsidiary Rels Valuation have been filed.
The two companies, Wells Fargo and Rels, allegedly were involved in price fixing and inflating property values through black listing appraisers who did not provide desired appraisals. Allegations state that Wells Fargo essentially demanded desired value to be used for appraisals and strong armed appraisers to match a target price provided by Wells Fargo underwriters.
Two Class action lawsuits are filed on behalf of home owners and appraisers against Wells Fargo and Rels. Additionally. civil lawsuits such as the one filed in Riverside, CA; Eram vs. Wells Fargo, point to a consistent pattern of conduct which can potentially create huge liabilities for Wells Fargo and open the flood gates of litigations and liabilities. Violations of RESPA and TILA would open the door for many home owners to demand damages from Wells Fargo.
Such patterns of racketeering and criminal conducts are very similar conducts which eventually brought WAMU and Country Wide down. It appears as the practice of fixing property values through fraudulent appraisals was a common practice in the happy days of real estate boom. Wells Fargo was just late to the party or covered their tracks a little better. Over inflating mortgage values was a very lucrative practice for these companies as they were able to securitize the mortgages and sell them at a profit to the street. Naturally driving up the price of mortgages would have valued such securities much higher for ultimately higher profits.
These companies essentially committed securities fraud in the unregulated real estate market. Price fixing, Volume manipulation, insider trading is all illegal by SEC, but who was watching the mortgage industry? The allegations are nothing short of SEC criminal violations, but I dont believe there is way to criminally prosecute these banks for their market fixing and racketeering.
Checkout the links below …. The same patterns that led to down fall of WAMU and Countrywide will start to emerge on Wells Fargo! Considering apparent strength of Wells Fargo, the downfall will most likely be bigger as well….
>>>Class action Lawsuit by home appraisers against Wells Fargo
http://www.hbsslaw.com/frontend?command=Lawsuit&task=viewLawsuitDetail&iLawsuitId=1981
>>>Class action Lawsuit by home owners against Wells Fargo
http://www.hbsslaw.com/frontend?command=Lawsuit&task=viewLawsuitDetail&iLawsuitId=1931
>>>Eram vs. Wells Fargo - Riverside case number RIC-512457 (http://public-access.riverside.courts.ca.gov/OpenAccess/logon.asp?forcelogon=Y&mcnmgotopage=default.asp&mcnmcourtcode=&mcnmcasenumber=&mcnmcasetype=&system=CIVIL)
>>> http://www.azcentral.com/news/articles /2009/05/08/20090508biz-appraisalsuit0508.html?&am p;wired
>>> http://www.washingtonpost.com/wp-dyn/c ontent/article/2008/01/25/AR2008012501650.html
>>>http://www.businessweek.com/the_thread /hotproperty/archives/2008/10/countrywide_app.html
>>> http://www.countrywideappraisallitigat ion.com/casedoc/Gibson_v_Countrywide_notice.pdf
I have been trying for the past 7 months to get something done to make my mortgage payment more affordable (2 years ago it was $656/month, now it is $986) and I have gotten nothing but the run around from them. Its not like Im some dead beat that just dont want to pay my bill, its hard to do it when you are in an accident and was out of work. The sale date on my house is 10-14-2009, and they still havent gotten anything done. It sickens me to think of how worthless these people are.
ReplyDeleteIt is no surprise that Wells Fargo has become insolvent! I know of a certain website which promotes real estate business. People can buy and sell property through this company. For bulk purchases you get a deep discount of 60-80%. Mainly foreclosure houses are sold here. It is highly profitable to invest in this company because of high profits.
ReplyDeleteReal estate deals can be made and experience will lead to success in foreclosures.I checked the website that you mentioned Mc and found it to be really helpful with awesome experience.
ReplyDeleteI would love to think creatively in this economy and our government has assisted us in this notion. The IRS has shared the good news that owner financed arrangements will be rewarded for those with wounded credit by allowing this arrangement to be included in the tax credit group. Congress has done its part to encourage wannabe homeowners that are often young people with credit mistakes...
ReplyDeleteI would like to do my part by entering into an owner finance with a fabulous young couple; however, WELLS FARGO MORTAGAGE COMPANY has informed me that they will excercise the Due-on-Sale clause if I do this... meaning I cannot owner finance these young buyers or WELLS FARGO will call the loan due..
SHAME ON YOU WELLS FARGO for counteracting everything the government and our people are tyring to do for each other in these trying
I would love to think creatively in this economy and our government has assisted us in this notion. The IRS has shared the good news that owner financed arrangements will be rewarded for those with wounded credit by allowing this arrangement to be included in the tax credit group. Congress has done its part to encourage wannabe homeowners that are often young people with credit mistakes...
ReplyDeleteI would like to do my part by entering into an owner finance with a fabulous young couple; however, WELLS FARGO MORTAGAGE COMPANY has informed me that they will excercise the Due-on-Sale clause if I do this... meaning I cannot owner finance these young buyers or WELLS FARGO will call the loan due..
SHAME ON YOU WELLS FARGO for counteracting everything the government and our people are tyring to do for each other in these trying
"Not taking risks like WAMU"....No? Well, maybe not under it's own name - but under the name of Wachovia, which it bought out after being it's trustee for 4 years. A Trustee does the business for it's principal - so how did Wells Fargo get away with not being held even partially liable for Wachovia's failed loans? Oh, yeah, ASSIGNEE LIABILITY EXEMPTIONS. How convenient.
ReplyDeleteThe cost approach to determining value is to estimate what it would cost to replace or reproduce the improvements as of the date of the appraisal, less the physical deterioration, the functional obsolescence and the economic obsolescence. The remainder is added to the land value.
ReplyDelete