Wachovia sees Orange County, Calif., home prices dropping 20 percent
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[August 08, 2008]

Wachovia sees Orange County, Calif., home prices dropping 20 percent

(Orange County Register, The (CA) (KRT) Via Acquire Media NewsEdge) Aug. 8--Wachovia, one of the largest financial firms in America, estimates some Orange County homes will drop 20 percent more in value, after already losing 12 percent.

Wachovia didn't give an exact time line. The company, during its July 22 earnings presentation, estimated losses on loans that allow borrowers to choose their monthly payment, including one that means owing more to the bank. Having been burned, it no longer makes that loan.



It looked at how much home prices are likely to drop amid homes with such loans. Then it estimated probable losses on the loans.

The company predicts Orange County will be the fourth-highest area in the nation for losses on such loans held by Wachovia. It expects to lose $546 million, or 9 percent, of about $6.37 billion in its option ARM loans in the county.



The three Metropolitan Statistical Areas that could cost Wachovia more money are: Riverside at $1.34 billion Los Angeles at $1.28 billion Phoenix at $648 million.

In all, Wachovia expects to lose $13 billion, or 11 percent, of its $122 billion in such loans nationwide.

Another interesting stat on Wachovia's option ARM loans in Orange County: On average, they originally equated to 69 percent of the value of the homes backing them. That figure has risen to 84 percent, based on computer modeling of home values in the area. By the time the market bottoms, Wachovia estimates that will total 104 percent.

To see more of The Orange County Register, or to subscribe to the newspaper, go to http://www.ocregister.com.

Copyright (c) 2008, The Orange County Register, Calif.
Distributed by McClatchy-Tribune Information Services.
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