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 ASR sister publication National Mortgage News.
NMN found that depositories and nonbank lenders were servicing $620 billion of second liens at yearend, compared to $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 don't offer the product anymore.
NMN and its affiliate, the Quarterly Data Report, found that Bank of America was the largest servicer of second liens at yearend with $140 billion of product. But year over year, BofA's portfolio fell by 6%.
JPMorgan Chase, and Wells Fargo & Co. ranked second and third with $118 billion, and $96 billion of second lien servicing rights, respectively. JPM's receivables fell 17%, while Wells' declined by 8%.