Wachovia has been hit hard with defaults on home equity, home improvement loans and defaulting mortgages to the point where many experts wonder how much more the bank can stand. Many banks that have offered home improvement loans with great abandon in the past few years are now regretting their decisions, since when these loans default, the bank is in the second position to recoup.”What you’re seeing is a taste of things to come,” said Len Blum, managing director at Westwood Capital LLC and former managing director of Prudential Securities Inc.’s investment banking group. “I think it’s going to get a lot worse before it gets better,” Blum said. “I don’t think any bank is immune from this.”"When there’s a radical shift, the models are out the window,” said SNL Financial banking analyst John McCune. “I think it’s going to show that they haven’t been provisioning aggressively. … They’re surely under-reserved for all this.”"While subprime was kept to a fairly small share of assets, exposure to home equity is much more significant,” said Keefe Bruyette & Woods bank analyst Fred Cannon. “Home equity loans for a lot of consumers became a savings account.”
Related reading: Home Improvement Loan
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