Residential delinquencies have stabilized and charge-offs have eased, and the second dip in home prices has not been remotely as severe as its older twin. Nonetheless, enormous pools of home equity loans that in fact have little or no home equity standing behind them continue to sow doubts about the health of the nation's largest banking companies.

The portfolios can look like gaping cavities in balance sheets. At March 31, home equity loans to underwater borrowers — or those who owe more on their first and second liens combined than their homes are worth — were equivalent to about half of Tier 1 common equity at Wells Fargo  and about a third at Bank of America Corp.

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