The less told story of the Wells Fargo $1.4 billion home equity write-down is that it wasn’t your typical sub-prime portfolio. According to an article in the San Francisco Chronicle by my friend, Kathleen Pender (and kicked my way by accounting-sleuth legend Ted O’Glove):
What it didn’t say in its news release was that these are not loans to borrowers with subprime credit scores.
“This was a prime portfolio,” Wells Fargo spokesman Chris Hammond says.
The average FICO credit score for all Wells Fargo home-equity loans is 750, well into prime territory.
The midpoint of all credit scores in America is 723. Only 40 percent of credit scores are 750 or higher. Subprime starts in the mid-600s and goes down from there, according to Fair Isaac, the company behind FICO scores.
Pretty much says it all. This thing ain’t anywhere near over.
Wells could not provide the average credit score for the loans it is writing down, but Hammond confirmed it’s prime.