Weiss Ratings: Delinquent Mortgages Continue
to
Threaten Health of U.S. Banks
JUPITER, Florida (July 26, 2011) — Delinquent mortgages continue to threaten the financial health and safety of the nation’s largest banks, according to a new study by Weiss Ratings, the nation’s leading independent provider of bank, credit union and insurance company ratings.
Among the nation’s largest mortgage lenders, Weiss Ratings found that MetLife Bank, California Bank & Trust, plus three Bank of America subsidiaries have the greatest exposure to nonperforming mortgages, reporting more than 42% of capital at risk from troubled mortgages as of March 31, 2011.
In contrast, Citibank, the fourth-largest mortgage lender in the country with $83 billion in mortgages on its books, reported only 6.7% nonperforming loans to capital plus reserves.
In the study, Weiss Ratings reviewed 218 large banks and thrifts holding $500 million or more in single-family mortgages and analyzed the percentage of problem loans to capital plus loan loss reserves1. This ratio measures how much of an institution’s capital is at risk from loans that are unlikely to be repaid and is a leading indicator of a bank’s overall financial vulnerability.
"Bad mortgages continue to represent a serious threat to some of the largest players in the banking industry as consequences from the real estate bubble continue to play out,” said Martin D. Weiss, president of Weiss Ratings. “With unemployment still high, many borrowers face mounting financial pressure, increasing the likelihood of default.”
The three Bank of America regional subsidiaries with 42% or greater exposure are in Rhode Island, California, and Oregon, with nonperforming mortgages of 63.7%, 53.2%, and 42.2% of capital, respectively. Furthermore, these subsidiaries, along with a fourth (in North Carolina) hold an additional $11.4 billion in mortgages that are 30-89 days past due as of March 31, 2011, indicating still more problems on the horizon.
Large Banks with Most Mortgage Exposure
The full list of the 25 large banks with the most mortgage exposure and their Weiss Financial Strength Rating can be found at http://weissratings.com/ratings/banks-delinquent-mortgages.aspx.
Weiss Ratings advises bank customers to carefully monitor the financial health of their financial institutions, paying particular attention to the impact that problem mortgage loans could have on a bank’s financial health.
For a complete list of Weiss Ratings’ strongest and weakest bank lists, visit www.weissratings.com/banklists.
About Weiss Ratings, LLC
Weiss Ratings is the nation’s leading independent provider of bank, credit union and insurance company financial strength ratings and sovereign debt ratings. Weiss accepts no payment or other compensation for its ratings from rated institutions. WeissRatings.com is a destination site to help consumers and professionals make informed financial decisions.
For more information contact:
Maryellen Murphy
mmurphy@weissinc.com
(561) 818-8885
- Nonperforming loans are defined as those 90-days or more past due or nonaccruing.