WaMu / J.P. Morgan Has Highest Percentage of 2nd Liens
Posted on 09 February 2009 by Jamie
According to recent numbers, J.P. Morgan (the company that purchased Washington Mutual) now has the highest percentage of 2nd lien loans such as home equity lines of credit (HELOCs).
A recent Seeking Alpha article reports:
“For now, let’s realize that the JPM/WaMu combo has the highest concentration of 2nd lien loans (and Option ARMs) in the absolute worse housing areas in this country, CA, FL, and NV. Keep in mind that 2nd lien loans have diminished priority in terms of claims on assets, so if a house sells for 70% of its previous sales value, and there was a 70 LTV loan combined with a 80 CLTV (combined LTV) HELOC on top, the HELOC lender takes a 100% loss. Let me repeat that, “a 100% loss”.”
Some speculate that these mortgages keep the company vulnerable and more likely to respond with HELOC line cuts.
photo credit: TheTruthAbout…
See Also:
WaMu Goes Down – Bought by J.P. Morgan
WaMu Cuts $6 Billion in HELOC Lines
Tags | Heloc, home equity lines of credit, J.P. Morgan, Washington Mutual