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Which Lenders Made the Worst Home Loans?

Posted by: Chris Palmeri on October 21, 2009


The worst mortgage loans were made in 2006, according to research by data provider MDA DataQuick. And those loans are begining to blow up now. According to DataQuick’s numbers, the lenders with the most foreclosure related filings in this year’s third quarter in California—-a hot bed of dicey loans were:

Countrywide (now Bank of America) with 7,583 default filings.

Washington Mutual, 5,146.

Wells Fargo, 4,425.

Bank of America loans not made by Countrywide accounted for 1,979 more filings and World Savings, now a part of Wells Fargo, had an additional 4,237. The numbers show the extent to which just a handful of big banks are bearing the burden of the mortgage crisis.

While World Savings, formerly Golden West Financial, had the highest percentage of loans from that 2006 period default at 11.9%, its stinky loans were nothing compared to the subprime orginators’ dismal record. Here are some of the numbers for them:

The default percentage at ResMAE Mortgage was 73.9 percent, Ownit Mortgage 69.5 percent, BNC Mortgage 61.4 percent, Argent Mortgage 59.9 percent and First Franklin 59.4 percent.

Some of this bad news is circular because First Franklin was acquired by Merrill Lynch which was subsequently bought by Bank of America. If you’re having trouble getting a loan officer from B of A on the line, now you know why, he’s busy!

The overall number of mortgage default notices filed against California homeowners fell last quarter compared with the prior three-month period. A total of 111,689 default notices were sent out during the July-through-September period, down 10.3 percent from the prior quarter, but still up 18.5 percent from the third quarter 2008. DataQuick cites changes in lender foreclosure policies and an uptick in the number of mortgages being renegotiated.

The firm says lenders may have intentionally slowed down the pace of foreclosures. “If so, it’s not out of the goodness of their hearts,” said John Walsh, DataQuick president. “It’s because they’ve concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interest.”

Reader Comments


October 21, 2009 11:06 PM

Here's an old time concept of which people have apparently lost sight:

If you can't afford it, do without.


October 22, 2009 2:28 AM

John Walsh, DataQuick president: “It’s because they’ve concluded that flooding the market with cheap foreclosures in this economic environment may not be in their best financial interest.” As it has been said many times in this forum, the Big Bankers are withholding hundreds of thousands of foreclosed homes from the market even though these loans are non-performing and upside-down. Under old FDIC rules, before FDIC allowed slippery accounting to replace "mark-to-market," banks had to unload non-performing real estate asset or else face higher insurance premium. Not today. Instead of writing off foreclosures as losses, banks are holding hundreds of thousands of foreclosed properties in the hope selling them in a seller's market. In the mean time, the Federal Reserve is sustaining the banks with free money courtesy of the taxpayer. Instead of allowing home prices to decline so that home ownership is affordable to more Americans, the Federal Reserve and the FDIC have sabotage housing market. This government scam is bigger than the real estate scam of this century. BW readers are intrigue as to why the all-knowing, all-clairvoyant Palmeri has not openly address this very scam.

Kerry Thompson

October 24, 2009 8:33 PM

For sale in Park City IL: 4 acres right off busy exit ramp.

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BusinessWeek editors Chris Palmeri, Prashant Gopal and Peter Coy chronicle the highs and lows of the housing and mortgage markets on their Hot Property blog. In print and online, the Hot Property team first wrote about the potential downside of lenders pushing riskier, "option ARM" mortgages and the rise in mortgage fraud back in 2005—well ahead of many other media outlets. In 2008, Hot Property bloggers finished #1 in a ranking of the world's top 100 "most powerful property people" by the British real estate website Global edge. Hot Property was named among the 25 most influential real estate blogs of 2007 by Inman News.

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