The dollar amount of second-lien mortgage debt continued to fall in the fourth quarter with roughly $620 billion in loans outstanding nationwide, a 9% decline over the past 12 months, according to survey figures compiled by National Mortgage News.
The survey found that depositories and nonbank lenders were servicing $620 billion of second liens at yearend, compared with $683 billion in the same period a year earlier.
Second-lien debt has been declining steadily over the past three years due to several factors including sagging home prices, tighter underwriting requirements on these credits, and the inability to use second mortgages as part of "80-10-10" loan-to-value ratio structures. (Using 80-10-10 loans, lenders were able to skirt mortgage insurance requirements for their borrower clients.)
In short, many mortgage bankers just do not offer the product anymore. National Mortgage News' Quarterly Data Report found that Bank of America Corp. was the largest servicer of second liens at yearend, with $140 billion of product. But year over year, B of A's portfolio fell by 6%.
JPMorgan Chase & Co, and Wells Fargo & Co. ranked second and third with $118 billion, and $96 billion of second-lien servicing rights, respectively.
JPMorgan Chase's receivables fell 17%, while Wells' declined by 8%.
