Los Angeles Times (01/29/08)
Wachovia Corp. reports a 2.43-percentage-point jump in defaulted loans underpinning 20 subprime bonds issued during the first six months of 2006 to 28.1 percent in December, following a gain of 2.25 percentage points the prior month. An increase in adjustable-rate mortgage payments is responsible for rising defaults, according to the bank, which notes that falling home prices are complicating borrowers' refinancing or sale plans. The pain could worsen, according to the Wachovia report, as an estimated $200 billion worth of loans written to borrowers with flawed credit are on track to adjust to higher rates in 2008.
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