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Strategies & Market Trends : The Residential Real Estate Crash Index
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To: Giordano Bruno who wrote (138535)8/1/2008 9:43:31 PM
From: XoFruitCakeRead Replies (1) of 306849
 
"Has WB done any capital raises yet, or are they still in the "we're not planning to raise capital" stage of denial?

EDIT: Did I hear right that they have $120B in pick-a-payment loans? "

Yes, they do..And they have made 11B provision for the loan last Q. The assumption is in the range of 20% default rate with 50% severity based on a projection that the HPA will have another 14% or so to go before housing bottom out. The current loan loss serverity is about about 38% of the default loan. The tangible equity is in the 5+% range and tier 1 ratio is in the 8+% range. My bet is that the ultimate default rate is going to be much higher than 20% given the toxic nature of the option ARM. Their current weighted LTV on these loan is in the 85-86% range up from 74 or so % at origination. The default is ramping pretty fast. I think they add 3B NPA last Q. Meridith Whitney seems to think that WB need to raise capitol in the next 2 months... Have put on WB at about the current price.
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