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| Data released by federal banking regulators showed that nearly one-third of mortgages outstanding were approved with less than full documentation. Around one-fifth had credit scores below 660, and more than 90 percent were serviced by a third party.The findings were derived from a joint survey conducted by the Office of the Comptroller of the Currency and the Office of Thrift Supervision. The two agencies surveyed the 14 largest mortgage servicers among the financial institutions they regulate.
Nine banks were surveyed, including Bank of America, Citibank, First Horizon, HSBC, JPMorgan Chase, National City, USBank, Wachovia and Wells Fargo. First Horizon has sold off much of its mortgage operations, while National City and Wachovia have been acquired by other institutions. Five thrifts surveyed were Countrywide, IndyMac, Merrill Lynch, Wachovia FSB and Washington Mutual. All of these institutions have either failed or been acquired since last summer. The respondents serviced 34,877,891 mortgages for $6.1 trillion as of Sept. 30, 2008. Their combined portfolios accounted for around 90 percent of first mortgages serviced by banks and thrifts and more than 60 percent of all U.S. mortgages. The servicers owned less than 10 percent of the loans they serviced, based on the number of loans outstanding. Those loans were owned by third parties through residential mortgage-backed securitizations and loan sales. The share of loans serviced for Fannie Mae and Freddie Mac was 62 percent. Around 9 percent of the loans serviced by the surveyed institutions were subprime. Borrowers with credit scores below 620 were considered subprime. Alt-A share was 10 percent, the report said. Alt-A included borrowers with scores between 620 and 659. Low- and no-documentation loans made up 30 percent of loans serviced by the institutions. Government mortgages represented 11 percent. Government loans included mortgage insured by the Federal Housing Administration and loans guaranteed by the Department of Veterans Affairs. Jumbo share was 7 percent, and two- to four-unit loans represented just 2 percent of outstandings. Approximately 85 percent of the loans were owner-occupied. Just 3 percent had debt-to-income ratios greater than 55 percent. Mortgages with loan-to-values above 100 percent made up around 2 percent of outstanding units. |
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