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17-Apr-2015 17:30

But according to multiple private investment shops set up to invest in distressed debt, Wells isn’t selling them.

If Wells were to sell the loans, not only would the bank have to book a loss, but would also have to pay out those pesky credit default swaps.

video=1254430805&play=1 ]In response to analyst expressing doubts that the near billion structured into the purchase of Wachovia for losses in its total portfolio will be enough CEO John Stumpf spoke out.

Stumpf told investors at the Barclays conference this week, Wells Fargo has used .2 billion in credits for losses from Wachoiva’s commercial mortgages, or one-fifth of the .4 billion in total losses it expects from those loans.

According to Susan Smith, author of a recent Price Waterhouse Coopers investor survey about the state of the CMBS market, more trouble is brewing.

“It’s going to be very difficult for these loans to get refinancing when the market value is going down and fundamentals are deteriorating,” says Smith.

Why wouldn’t they do it with the loans they took on from Wachovia?

” On Tuesday on CNBC, Whitney said again “I don’t know if those commercial modifications are going to work.” [link:

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Miller has a recommended stock price of while WFC is currently trading around .

According to data from her report, problems in the South Florida region, to which Wachovia had large exposure, are amplified by an increasing overall cap rate, up 80 basis points from last year, and declining rent prices. The overall cap rate goes up when the overall risk in the market is up.

Given the warning signs on the horizon, it’s plausible that Wells Fargo would try to unload some of these troubled loans on the secondary market.

In order to sort through the disaster that is Wells Fargo’s commercial loan portfolio, the bank has hired help from outside experts to pour over the books… Not only do the bank’s outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank, Wachovia, which Wells purchased last fall as it teetered on the brink of collapse, was so desperate to increase revenue in the last few years of its existence that it underwrote loans with shoddy standards and paid off traders to take them off their books.

According to sources currently working out these loans at Wells Fargo and confirmed by Dan Alpert of Westwood Capital, when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer’s risk premium by writing credit default swap contracts against these subordinate bonds.

Miller has a recommended stock price of while WFC is currently trading around .According to data from her report, problems in the South Florida region, to which Wachovia had large exposure, are amplified by an increasing overall cap rate, up 80 basis points from last year, and declining rent prices. The overall cap rate goes up when the overall risk in the market is up.Given the warning signs on the horizon, it’s plausible that Wells Fargo would try to unload some of these troubled loans on the secondary market.In order to sort through the disaster that is Wells Fargo’s commercial loan portfolio, the bank has hired help from outside experts to pour over the books… Not only do the bank’s outstanding commercial loans collectively exceed the property values to which they are attached, but derivative trades leftover from its acquisition of Wachovia are creating another set of problems for the already beleaguered San Francisco-based megabank, Wachovia, which Wells purchased last fall as it teetered on the brink of collapse, was so desperate to increase revenue in the last few years of its existence that it underwrote loans with shoddy standards and paid off traders to take them off their books.According to sources currently working out these loans at Wells Fargo and confirmed by Dan Alpert of Westwood Capital, when selling tranches of commercial mortgage-backed securities below the super senior tranche, Wachovia promised to pay the buyer’s risk premium by writing credit default swap contracts against these subordinate bonds. for investors, banks hold CDS liabilities off balance sheet and do not recognize them as a loss until they actually have to pay it.