The regulators are back at Wells Fargo & Co., and real estate is their target.
Thirteen battle-hardened examiners from the Office of the Comptroller of the Currency marched into Wells' Southern California construction lending office in Irvine last week, sources said. Their mission: to vet real estate credit files.
The exam comes just nine months after a review that lasted more than three months and ended with Wells' taking a $700 million provision for potential loan losses.
Observers see the current exam as a major test of Southern California commercial real estate, which has yet to show clear signs of recovery.
No one can accuse Wells of being unprepared. From March to sometime in May, more than two dozen credit trainees were dispatched to Irvine to inspect the tiniest details of real estate loan documents. Wells wants no technical error, the sources said.
A separate team did top-to-bottom evaluations of each credit, reappraising properties and reclassifying loans as needed.