wabuffo

Wells Fargo: The Good, the (Not Too) Bad and the Ugly

Bapcha said "HELOC portfolio of $83.8 billion is defaulting at the rate of 3.46% annualized as opposed to 1.36% annualized for the remaining core portfolio."

I think you misread this in the 10-Q. Its not the total HELOC portfolio that is defaulting at 3.46% but a portion of it.

According to the 10-Q: "We segregated into a liquidating portfolio all Home Equity loans generated through the wholesale channel not behind a Wells Fargo first mortgage, and all home equity loans acquired through correspondents. While the $11.1 billion of loans in this liquidating portfolio represented about 3% of total loans outstanding at June 30, 2008, these loans experienced a significant portion of the credit losses in our $83.8 billion Home Equity portfolio, with an annualized loss rate of 3.46% for second quarter 2008, compared with 1.36% for the remaining core portfolio."

So $11.1 B of HELOC loans not originated by WFC and connected to WFC prime mortgage (such that WFC has both the first and second) are defaulting at 3.46%. The remaining $72.7B of WFC HELOCs are defaulting at just 1.36%.

Perhaps you can now move this to your "The Good" section as WFC's HELOC performance is much better than their peers.

wabuffo