The outlook is still grim for mortgage lenders as the Wells Fargo CEO says these are the worst times since the Great Depression. Ouch. Need more bad news? Mortgage lenders continue to be hit with negatives this week as it attempts to dig out from under the subprime mortgage mess and collateralized debt obligations (CDOs) that have gone sour.
Wells Fargo & Co. CEO John Stumpf this morning said that the housing market is in its worst shape since the Great Depression, according to the Reuters news service. Stumpf, speaking at a Merrill Lynch banking conference, said this is the “steepest, fastest, most prolonged decline in residential real estate that we’ve seen in a very long time.”
He noted that Wells Fargo is not immune to the current problems but that its exposure to CDOs and subprime loans is minimal. Capital One Financial Corp. CEO Richard Fairbank said at the Merrill conference yesterday that about two-thirds of its customers that are 90 days or more delinquent on their mortgages are current on their credit card bills. Cap One announced last week that its charge off rate of managed loans in October rose to rose to 3.28 percent from 2.86 percent in the third quarter.
Late yesterday mortgage lender Novastar Financial reported it had lost $598 million in the third quarter and that its stock may soon be delisted by the New York Stock Exchange. The company’s stock was down more than 56 percent to $2.02 in midday trading today.