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May 17, 2008 1:28:51 AM CDT



Home-Equity Loans Latest to Bite Banks  

Posted Mar 12, 08 12:03 PM CDT in Business    Editor's Choice

(newser) – Home-equity loan defaults are soaring, the Wall Street Journal reports, as the trickle-down effect of the subprime mortgage crisis makes its way into what was once a source of big profits for lenders. JP Morgan Chase and Wells Fargo both escaped major writedowns on subprime mortgages gone bad, but already are feeling the pain from home-equity losses.

Analysts say problems will continue through 2008, prompting banks to tighten credit further. JP Morgan said it expects home-equity-related losses to increase by 81% from the fourth quarter of 2007 to the first quarter of '08, to $450 million, adding that losses could double by year’s end. Washington Mutual, National City, and SunTrust are among other lenders facing home-equity woes.

Source Wall Street Journal

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