"Caught Off-Guard"

From Dow Jones (hat tip HBB):

Wells Fargo & Co. (WFC) said second-quarter profits rose 9%, boosted by continued loan and deposit growth, but some of its big regional-banking peers struggled...The one major blemish was a rise in losses on home-equity loans. Wells Fargo attributed the trend to depressed home prices in some markets, especially the Midwest and California's Central Valley. Wells executives acknowledged they were caught off-guard by the severity of the losses, which they predicted would continue through the rest of the year. They said they are tightening their underwriting standards and putting a greater emphasis on loan collections.

From The Union:

The number of defaulted properties in Nevada County has doubled in the past year, according to figures from the county recorder’s office. Since January lenders have issued 253 notices of default in the county. That’s up from last year, when lenders issued 124 notices during the same time period, according to recorded documents.

In the county, 282 homes are in some phase of foreclosure, bank ownership or sale, according to RealtyTrac, an online marketplace at www.realtytrac.com for foreclosure properties.
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Placer County has 3,086 homes in some phase of foreclosure, bank ownership or sale, and Yuba County has 567 such listings, according to RealtyTrac.
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The troubled property owners are not exclusively first-time buyers or young families. In some cases, owners of upscale homes “got in over their heads” and had to foreclose on their property, according to Realtor Cheryl Rellstab.
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Foreclosure notices in The Union classifieds have grown by four times and 18-20 notices a month are not uncommon this summer, compared with five notices last year. Most of the foreclosure properties come after two to three years of ownership.
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Interest-only loans are tools to get some buyers into a home and have been used effectively by a number of people, [John] Taber [a commercial and residential loan officer with Delta Home Loans] said. Those who neglected to do their homework before they invested are the ones hurting now, Taber said. “If you take a chain saw out and don’t know how to use it, you’ll be without a hand,” Taber said.

From the Chico Enterprise Record:

A recently released national housing report says there's nearly a 47 percent chance that Butte County housing prices will decline over the next two years.
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While price appreciation may be good for those interested in turning real estate profits, it doesn't make for a good environment for homeownership, said PMI spokeswoman Stephanie Corns. She noted other indicators say Butte County is struggling with housing affordability. "Income hasn't kept up with home prices," said Corns, making it difficult for many people to get into the market.
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Chico Association of Realtors President Kym Campbell said the Chico market has experienced price drops, but believes that trend has slowed. Campbell noted that as prices drop, sales activity has revved up. She sees prices remaining stable over the next few months rather than rising.
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Campbell acknowledged the swings the market has taken in Chico, saying properties have stayed on the market longer, and that sellers have switched agents, thinking it would make a difference.

They've also dropped prices in order to create interest in their properties. Realtor Bill Campbell — Kym Campbell's husband — mentioned a house that had been listed at more than $1 million, but the seller dropped that to $975,000.

"We have seen some major price reductions. Not that the houses aren't worth the money. The market just won't bear it," he said.