Georgia Leads US in IO Nonprime Borrowers

IO loans have been very popular lately — the IO share jumped to 23% last year from 10% in 2003, according to e-mailed data from Loan Performance. Most — about 31% — of the loans have been purchase money. Compared to 2000, the share has risen by about 21%.

In 2004, about 40 percent of Georgia’s originations were IO loans, increasing 12 percent from the previous year, Loan Perfornance’s report said.

The state IO loan data by the San Francisco-based mortgage information and analytics provider consists of nonagency securities, company spokesman Bob Visini said. While conforming loans are excluded, subprime, Alt-A and jumbo nonconforming are included.

Loan Performance believes the driver of the lO loan “phenomenon” is house price appreciation, the spokesman said, noting that the firm zoomed in on metropolitan statistical areas and found that high levels of IO loan activity were usually associated with higher priced markets.

Within Georgia, the MSAs with the most IO loan activity last year were Athens, in which nearly 58 percent of loans were IO, and Atlanta, with about 46 percent.

Colorado ranked second with 39% of its originations being IO last year, followed by Nevada’s 37%, Arizona’s 35%, and California’s 33%.

Rounding out the 10 states with the most IO loans were Virginia with 30% of its loans being IO, followed by Washington, Utah, Oregon and South Carolina, whose percentage was 24.

Amongst the top 10 states, Nevada’s IO loan volume grew the most — by 25% — year over year.

The state with the least amount of IO loans last year was Iowa — IOs accounted for less than 5% of its volume. Oklahoma, Indiana, Nebraska, Louisiana, Wisconsin and Arkansas followed all with IO loans comprising below 6% of their production.