BofA subprime mortgage limbo averages 550+ days
The 90-day delinquent inventory of Bank of America (BAC) subprime mortgages have spent an average 552 days without some sort of resolution, according to a study released Friday by Moody's Investors Service. The credit ratings agency studied the six largest prime and subprime servicers, based on data reported by residential mortgage-backed securities trustees from June 2010 to June 2011. Combined, these firms service 75% of the market. Moody's findings mirror the early Fannie Mae mid-year report card. Both highlighted the poor performance of BofA and JPMorgan Chase (JPM) along nearly every metric. Analysts measured the banking giants' ability to keep loans current, and how long these loans have gone without a modification, short sale, deed-in-lieu or foreclosure once the loan turned delinquent. The servicers were also measured on their speed of liquidation once the property was repossessed. Analysts explained both BofA and Chase continue to be victims of the massively troubled platforms they acquired from Countrywide Financial, Washington Mutual and the subprime originator EMC. "Integrating the servicing platforms, employees, processes, and technologies into their servicing operations overwhelmed the banks, reducing their ability to proactively address the increased number of problem loans in their combined portfolios," Moody's said. The lengthy amount of time BofA subprime loans are currently spending in serious delinquency limbo is 120 days longer than the next closest servicer, Ocwen Financial Corp. (OCN), which became the largest subprime servicer with its acquisition of Litton Loans Servicing this year. The serious delinquent inventory of Chase jumbo mortgages have sat an average 417 days without a resolution, which was followed by 381 days at BofA and 352 at Citigroup (C). The 90-day delinquent Alt-A mortgages at Chase have spent 425 days without a resolution, followed by 396 days at BofA. Once the loan reached foreclosure, the speeds picked up. Ocwen took the longest to resell REO property that once backed a subprime property at 237 days. Wells Fargo (WFC) took the longest to sell REO on Alt-A loans at 191 days. BofA was second in both categories. BofA and Chase were also ranked low in curing mortgages and keeping them current. Less than 16% of BofA subprime mortgage borrowers became current, paid in full, received a modification or missed less than two payments one year after falling into serious delinquency. That rate at Ocwen was 44.5%. At Chase, less than 17% of its serious jumbo mortgages were cured or avoided a redefault, and less than 14% of its Alt-A mortgages did. BofA held the second lowest percentage in each of these categories, according to Moody's. Write to Jon Prior. Follow him on Twitter @JonAPrior.