Ranking lenders by risky loans

This article was originally on a blog post platform and may be missing photos, graphics or links. See About archive blog posts.

Good morning. Why are some lenders failing and others hanging in? Simple, according to a new study by SMR Research: Most of the lenders that made the riskiest loans are failing. Inman News: ‘Nearly all of the mortgage lenders who engaged in the riskiest underwriting practices during the housing boom have gone bankrupt, been sold, or curtailed their operations.’

SMR -- sorry, the report is not available for free -- ranked 163 U.S. lenders according to credit risk. A score of 1,000 was average. Here are some of the riskiest lenders, their scores, and SMR’s notes on what happened to them:

South Star Funding 2,704 (closed)
Impac Funding 2,567 (closed wholesale)
Ownit Mortgage 2,434 (filed bankruptcy)
New Century 1,904 (filed bankruptcy)

Here are a few of the surviving lenders whose credit risk score ranked higher than the 1,000 average:

Barclays Group U.S. 2,220
H & R Block Mortgage 1,770
Quick Loan Funding 1,662
Indymac Bank, 1,609
Metrocities Mortgage 1,466
Countrywide 1,016

Marketwatch: ‘At least 22 of the country’s largest mortgage lenders that haven’t gone bankrupt are still engaged in risky underwriting practices, according to a new study by SMR Research Corp. ‘These companies are in danger of credit losses on mortgages they’ve produced,’ said Stu Feldstein, president of SMR Research.’

Your thoughs? Comments? Insights?
Hat tip: Cal