p>United States, 17th October: The fear is evidently clear in the US markets that the recent foreclosure mess will affect major US banks.
United States, 17th October: The fear is evidently clear in the US markets that the recent foreclosure mess will affect major US banks.
Although analysts seem to be disagree about the impact on the different banks in the US, but agreed that the stock market was already showing signs of such conditions.
The fact that shares of Bank of America went down by 5.2 percent while those of JP Morgan Chase declined by 2.8 percent.
According to Barclays Capital financial analyst, Jason Goldberg, the stock market is affected by clouds of uncertainty and the industry must work to put behind this issue.
However, there were no visible signs of the end of this crisis in the near future.
And even the analysts don’t seem to find any way to clear such a mortgage crisis. Rochdale Securities analyst Richard X. Bove says that although the problem will not last longer, nonetheless, it is going to be here for a minimum of four to five years period or even a decade. And the cost could be a whopping $1.5 billion for each quarter.
As of now, several major institutions in the US including JP Morgan, Bank of America and GMAC Mortgage have put a halt on the foreclosures in several US states and the signs of resuming these are unknown yet. So, this will mean huge additional costs as the foreclosures are kept on record in the books of the bank.
The issue of foreclosure is being regarded as a major risk for the banks, the Wall Street feels. However, there does not seem to risks of large-scale abuses.
An analyst with Oppenheimer, Christopher Kotowski feels that the US banks should have prepared themselves for the increasing rate of foreclosures by adding more staff.
And the issue as to how do the US banks lent money initially is going to add to the woes of banks already struggling with losses related to mortgage. Moreover, banks might get sued by more holders if it was found that the mortgages were sold in an unplanned way.
It is being reported by a San Francisco based Branch Hill Capital that Bank of America might face mortgage securities losses to the tune of around $70 billion and feel compelled to make purchases from private investors as well as Freddie Mac and Fannie Mae.