5. Deutsche Bank
> Loans in foreclosure: 33,608
> Avg. property value: $228,446
> Pct. seriously underwater: 63%
In January 2007, Deutsche Bank A.G. (NYSE: DB) bought home loan provider MortgageIT for $430 million. Soon after, the U.S. housing market collapsed. In May 2012, the bank agreed to pay the U.S. federal government more than $200 million to resolve charges that MortgageIT misrepresented the quality of mortgage loans it insured on behalf of the Federal Housing Administration. Three years ago, Deutsche Bank also paid the Federal Deposit Insurance Corporation $54 million to settle allegations against MortgageIT. While Deutsche Bank does not have a servicing arm, it acted as a trustee on more than 33,000 loans in the foreclosure process across the country, twice the number of any other non-U.S. bank.
4. U.S. Bancorp
> Loans in foreclosure: 44,881
> Avg. property value: $206,754
> Pct. seriously underwater: 62%
Nearly 45,000 loans serviced by U.S. Bancorp (NYSE: USB), with a cumulative property value of just under $9.3 billion, were in default as of February. About 28,000, or 62%, of all mortgages in foreclosure were considered seriously underwater. The bank was among the 10 financial institutions that agreed to pay $8.5 billion to settle allegations of widespread mortgage abuse in the foreclosure process, with U.S. Bancorp’s share of the payments totaling $80 million. The bank was the third-largest mortgage originator in 2012, lending $84.5 billion. This was up significantly from the $49.1 billion it lent in 2011.
3. JPMorgan Chase
> Loans in foreclosure: 54,325
> Avg. property value: $208,183
> Pct. seriously underwater: 54%
As of February 2013, J.P. Morgan Chase & Co. (NYSE: JPM) serviced nearly 55,000 mortgages that were in the foreclosure process, worth $11.4 billion. Fortunately for the bank, just 54% of those homes in foreclosure were considered seriously underwater, a significantly lower percentage than banks such as Bank of New York Mellon and Deutsche Bank. The bank was able to provide more loans in 2012 than it did in previous years. That year, the bank was responsible for 10% of all mortgage loans in the United States, worth $182.2 billion. This was up from the $146.7 billion the company had lent in 2011.
2. Wells Fargo
> Loans in foreclosure: 84,903
> Avg. property value: $205,550
> Pct. seriously underwater: 56%
Wells Fargo & Co. (NYSE: WFC) serviced $19.9 billion in total mortgage debt, a higher figure than any other bank except for Bank of America. Wells Fargo’s past lending practices received intense scrutiny in the past several years. The bank was one of the 10 servicers that participated in the $8.5 billion mortgage settlement announced in January. The bank was also required to pay $175 million in 2012 to settle accusations that it discriminated against African American and Hispanic customers between 2004 and 2009. Despite these troubles, Wells Fargo was the largest mortgage lender in the U.S. during 2012, originating 28% of all mortgages, worth $524 billion.
1. Bank of America
> Loans in foreclosure: 96,319
> Avg. property value: $203,956
> Pct. seriously underwater: 61%
Bank of America Corp. (NYSE: BAC) serviced more loans for homes in foreclosure than any other bank in America as of February, at more than 96,000. In all, these properties had more than $23 billion in mortgage debt, and 60% of them were seriously underwater. The bank’s purchase of mortgage lender Countrywide Financial has been especially criticized. As of mid-2012, the acquisition was believed to have cost Bank of America over $40 billion. According to Mortgage Daily, the bank is taking a step back in both mortgage lending and servicing. In 2012, it cut the amount of mortgage loans it originated from $156.1 billion to $78.7 billion, while cutting its mortgage servicing operations by 21%.
Correction: An earlier version of this article incorrectly identified Bank of New York Mellon and Deutsche Bank as mortgage servicers. In fact, both are mortgage trustees. 24/7 Wall St. relied on data compiled by RealtyTrac for this article. RealtyTrac has since revised that data based on new information which was not available to it or 24/7 Wall St. at the time of publication. According to RealtyTrac, the list of entities provided by them “represent institutions that were listed on the foreclosure documents (default notice or auction notice) as the noteholder or beneficiary in non-judicial foreclosure documents or the plaintiff in judicial foreclosure documents. In some cases the noteholder/beneficiary or plaintiff are also acting as servicers of the loan, collecting payments and executing the foreclosure proceedings. In some cases the noteholder/beneficiary or plaintiff listed is a trustee for a pool of mortgage loans held in a trust.”