Wamu: “Near Perfect Storm” In Housing

Per Bloomberg, it looks as if at least some of the nation’s larger banking operations are figuring out that we aren’t facing a short-term market correction in housing and mortgages:

Washington Mutual Inc., the largest U.S. thrift, said that conditions in the housing market are creating a ‘near-perfect storm’ and may force the company to set aside more money to cover bad loans.

Chief Executive Officer Kerry Killinger told the Lehman Brothers Holdings Inc. financial services conference today the bank may have to increase its loan-loss provision by $500 million. Previously the bank forecast provisions of $1.5 billion to $1.7 billion for the full year.

“The combination of rising delinquencies, higher foreclosures, more housing inventories, increasing interest rates on many mortgages and greatly reduced availability of mortgages due to limited liquidity is creating what we call a near-perfect storm for housing,” he said.

Washington Mutual fell $1, or 2.9 percent to $34.02 at 10:04 a.m. in New York Stock Exchange composite trading. The stock has declined 25 percent this year.

“It now appears that housing and capital market corrections will be worse and longer lasting than even we expected,” Killinger said.

HW readers already know what Killinger and WaMu are now realizing — that we’re looking at a credit event impacting the housing and mortgage markets that will have a dramatic impact on market participants over the course of the next 12 to 18 months.