Industry NewsMortgage

Fitch lowers ratings of banks with home-equity exposure

WaMu, Wells Fargo, National City affected
Published on Mar 11, 2008

Citing deteriorating performance of home-equity loans, Fitch Ratings has lowered the debt ratings of some big name banks including Washington Mutual, Wells Fargo, National City, Providian Financial and First Horizon, while warning it may take similar action toward Bank of America, Citigroup, Fifth Third Bancorp and SunTrust. Home-equity delinquency rates are rising at "a far more rapid pace than even most bankers' and analysts' grim outlook for 2008 had anticipated," Fitch analysts said. In markets such as California and Florida where home prices are falling, loss severities on many loans are hitting 100 percent, and it's often cheaper for banks to charge-off the entire amount rather than go through the foreclosure process, analysts said. Fitch downgraded Washington Mutual's long-term issuer default rating from "A-" to "BBB," in part because of the bank's heavy exposure to California. About 37 percent of WaMu's total loan portfolio consist...

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