Nomura Securities on U.S. Banks: Big Issue for Housing is Mortgage Underwriting
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Rating Summary:
2 Buy, 11 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 8 | Down: 5 | New: 26
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Nomura Securities on U.S. Banks by Brian Foran
Foran said, "The big issue for housing is mortgage underwriting – housing is not getting better because people can’t get mortgages; people can’t get mortgages because banks are too risk averse; banks are too risk averse given unquantifiable liability and capital requirements for their mortgage business between state AGs, put-backs, QRM, and Basel 3 to name a few. Under half the population now qualifies for a traditional mortgage. The top five US banks we cover ranked by mortgage and home equity exposure are underperforming the group year to date, especially since March. The top five mortgage and home equity lenders exposed are Hudson City (Nasdaq: HCBK) at 100% of loans, First Horizon (NYSE: FHN) at 46%, Wells Fargo (NYSE: WFC) at 46%, Bank of America (NYSE: BAC) at 44% and SunTrust (NYSE: STI) at 41%. The average of the banks we cover is 33%."
Foran said, "The big issue for housing is mortgage underwriting – housing is not getting better because people can’t get mortgages; people can’t get mortgages because banks are too risk averse; banks are too risk averse given unquantifiable liability and capital requirements for their mortgage business between state AGs, put-backs, QRM, and Basel 3 to name a few. Under half the population now qualifies for a traditional mortgage. The top five US banks we cover ranked by mortgage and home equity exposure are underperforming the group year to date, especially since March. The top five mortgage and home equity lenders exposed are Hudson City (Nasdaq: HCBK) at 100% of loans, First Horizon (NYSE: FHN) at 46%, Wells Fargo (NYSE: WFC) at 46%, Bank of America (NYSE: BAC) at 44% and SunTrust (NYSE: STI) at 41%. The average of the banks we cover is 33%."
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