The housing market collapse is taking more bank victims. You can protect your money and avoid needless hassle by knowing the safety rating of your bank.

The Latest Victims

Washington Mutual may be in a death spiral, losing $3.3 billion in the second quarter…admitting to losses of as much as $19 billion this year…and probably on its way to losses of an estimated $26 billion.

That estimated loss is over four times its total market value as of Friday’s close…12 times its yearly earnings in the best of times.  Why?

Washington Mutual has $214.6 billion in residential mortgages on its books.  More than three-quarters are in non-traditional categories…option ARMs, subprime loans, home equity loans and multi-family mortgages.  Less than one-quarter of the traditional, single-family prime variety.Nonperforming assets are growing by an average of 36% each quarter.  If they continue to grow at that rate, they could reach a whopping 6.7% of total assets by year-end.

Wachovia, the nation’s fourth largest bank with nearly $800 billion in assets, is also in danger.  The recent news is a huge $8.9 billion loss.  According to Weiss Research, its big mistake: the acquisition of subprime lender Golden West Financial for $24 billion at the very peak of the real estate market in 2006.  

Now the bank is stuck with option ARMs valued at $122 billion concentrated in California.  Result?

Over $55 billion of shareholder wealth has been wiped out since the acquisition – more than double the total purchase price of Golden West.

Wachovia has a similar problem to Washington Mutual, namely, a high percentage of high risk loans.  With $231 billion in residential real estate loans on the books, only 22% are “traditional mortgages.”

First National of Nevada and First Heritage N.A. - Following the failure of IndyMac Bank, the FDIC just took over First National of Nevada and First Heritage N.A.

The 28 branches of the 1st National Bank of Nevada and First Heritage Bank N.A. — owned by Scottsdale, Ariz.-based First National Bank Holding Co. — were closed Friday by the FDIC. First National Bank of Nevada also operates as First National Bank of Arizona.

But Mutual of Omaha Bank bought all the two banks' deposits, even those over the amount protected by FDIC insurance limits. IndyMac customers had to take a loss on whatever amount they had in the bank over the insurance limits.

Recent Bank Failures Could Be Tip of the Iceberg - What To Do Now

More bank failures are expected during this rocky phase of the economy.  While the FDIC does insure deposits up to $100,000, there are still risks and inconveniences of getting stuck in a failed bank or thrift.

For example:

• After a bank failure, there could be a significant delay in regaining access to your money.  You will get your $100,000, but don’t expect it overnight.

• If your principal is $100,000 your accrued interest could be at risk.

• If you account is a business checking account with large uncashed checks outstanding, even though your book balance may be under the $100,000 limit, your actual bank balance may be over the limit.  So those funds may be at risk.

Action To Take

Check the safety of your bank.  It’s easy to do…

Step 1. Go to TheStreet.com's Banks & Thrifts Screener.
Step 2. Look for the green box to enter your information. Under "Bank Name," type in only the first word of your institution's name.
Step 3. To the right of your bank or thrift's name, make note of its rating: A is excellent, B is good, C is fair, D is weak and E is very weak.
Step 4. Use these general guidelines:

• If your bank or thrift is rated B+ or better, according to Weiss Research, it’s considered secure.

• If it's rating is between B- and C-, check it a few times per year to make sure it hasn't fallen below C-.

• If it's D+ or lower, seriously consider switching to a safer institution, of which there are many to choose from.

Where To Look Now for Commercial Real Estate Loans and Business Loans

As banks sink deeper into trouble, writing off millions of dollars in bad loans, and increasing reserves, many banks are cutting way back on making new loans.  If your local banker is saying “No” to your commercial real estate or business loan request, you need to find out which banks are still making loans. The tricky part is finding them outside your local area.

A little-known service is now available to commercial borrowers that not only prepares an independent loan application for you, putting your loan request in the best possible light, it also pre-approves the loan request based on standard bank underwriting guidelines.

Find a Bank and Get Approved with a Mouse Click

The best part is, you can then have your application package electronically submitted to nearly 100 national and regional banks and other funding sources still actively funding commercial loans and get loan quotes in just a few days. 

This eliminates the problem of being located in an area of the country where the banks are saying “No” to new loans. This Loan Packaging Service is available through this website.  If you are actively seeking financing or will do so in the near future, review more details here, at Commercial Loan Services.

Now is the time to be PRO-active.  Keep you money in banks with good safety ratings.  Easily and quickly submit your commercial loan request to the right lenders with a Loan Packaging and Submission Service.  

[tags]real estate, finance, bank ratings, business[/tags/

News headlines of late are filled with bad news about mega losses for banks, investment firms and the GSEs…

• Earlier this month we saw IndyMac Bank taken over by regulators. With assets of $32 billion as of March 31, it was the second-largest institution to go down in U.S. history. Resolving the failure won't be cheap, either. The FDIC estimates the cost at anywhere from $4 billion to $8 billion.

• Megabank Wachovia was practically swimming in red ink, recording a loss of $8.9 billion, or $4.20 per share, in the second quarter. Analysts were looking for a loss of just 78 cents per share. The bank said it plans to slash almost 11,000 jobs. It also took the knife to its quarterly dividend, cutting it 87% to just 5 cents a share.

• Merrill Lynch just disclosed it was creamed by $40 billion in investment write-downs in the second quarter — $69 billion so far this year.

• Citigroup has revealed a $2.5 billion loss — and a decline in total assets of a staggering $99 billion so far this year.

• Plus the government GSE’s, Fannie Mae and Freddie Mac are on the verge of going under.

What about the smaller regional banks? More bad news…

• Regions Financial turned in a 55% drop in profit.

• Fifth Third of Cincinnati lost $202 million, a huge swing from a year ago, when it generated $376 million in net income.

• KeyCorp of Cleveland did much worse. Its quarterly loss: $1.13 billion, vs. year-ago income of $334 million.

• Buffalo's M&T Bank has announced a $100 million loan loss provision, more than triple the $30 million of a year earlier. Net charge-offs of bad debt surged to $99 million from $22 million. Second quarter profits dropped 25% year-over-year, widely missing its estimates.

• Cleveland's National City lost $171 million in the first quarter, a huge swing from its year-earlier profit of $319 million. The company had to offer big enticements to investors in order to raise $7 billion in capital earlier this year. And even that large infusion is not likely to be enough.

All these entities are victims of the housing market melt down.  Here’s the latest news on this crisis:

Treasury Secretary Paulson predicts 2.5 million home foreclosures in 2008; and Fed Chairman Bernanke has testified that the crisis will continue deep into 2009. So, in combination, these two high officials are warning of potentially millions more foreclosures in 2009.

U.S. home foreclosures just surged 53% in June. They’re at the highest levels in recorded history.

Home prices continue to plunge. But they still have a long, long way to go as the following chart reveals.

The housing crisis has spread to every major sector in the economy.

These losses and market conditions have forced a number of banks to tighten the purse strings on new loans including commercial loans.  Also, bank regulators are taking a closer look at banking activities and requiring banks to increase their reserves.  

Many borrowers feel stuck if they live in an area where their banker is not making commercial loans like they used to.  What to do?

The good news for commercial property owners is…

I know you were reading patiently for this.

Not all banks are in trouble and they are still making loans on commercial property.  The trick is how to find out who they are if they are outside your area.

A little-known service is available to commercial borrowers, not only prepares an independent loan application for them, putting their loan request in the best possible light, it also pre-approves the loan request based on standard bank underwriting guidelines.

The best part is, a borrower can then have their application package electronically submitted to nearly 100 national and regional banks and other funding sources still actively funding commercial loans and get loan quotes in just a few days.  This eliminates the problem of being located in an area of the country where the banks are saying “No” to new loans.

This Loan Packaging Service is available through this website.  If you are actively seeking financing or will do so in the near future, review more details here, at Commercial Loan Services.

Tags: commercial property loans, commercial property, commercial real estate, commercial real estate loans