Wells Fargo Names Orange County and LA as Distressed Markets

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Wells Fargo Home Equity is planning on moving the Orange County and Los Angeles, California home markets from “soft” to “distressed” in its underwriting guidelines for home equity loans. This move restricts underwriting guidelines by an additional 5% in terms of loan to value guidelines for home equity loans. While the change hasn’t been made yet; it has been deemed imminent by internal folks close to the situation. This would cap all second mortgage liens at 85% combined loan to value in those counties. Stable and soft market LTV maximums are at 90%.

This comes on the heels of the recent Goldman Sachs report that stated that California home values could be overpriced by as much as 35-45%. We’ll have more on that report later.