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THE BUST 

In , the respective average delinquency rates for the non-GSE and GSE loans
were . and .. These patterns are most likely driven by differences in under-
writing standards as well as by some differences not captured in these mortgages. 
For instance, in the GSE pool, borrowers tended to make bigger down payments. The
FCIC’s data show that  of GSE loans with FICO scores below  had an original
loan-to-value ratio below , indicating that the borrower made a down payment
of at least  of the sales price. This relatively large down payment would help offset
the effect of the lower FICO score. In contrast, only  of loans with FICO scores
below  in non-GSE subprime securitizations had an LTV under . The data il-
lustrate that non-agency securitized loans were much more likely to have more than
one risk factor and thereby exhibit so-called risk layering, such as low FICO scores
on top of small down payments.
GSE mortgages with Alt-A characteristics also performed significantly better than
mortgages packaged into non-GSE Alt-A securities. For example, in  among
loans with an LTV above , the GSE pools have an average rate of serious delin-

quency of ., versus a rate of . for loans in private Alt-A securities. These
results are also, in large part, driven by differences in risk layering.
Others frame the situation differently. According to Ed Pinto, a mortgage finance
industry consultant who was the chief credit officer at Fannie Mae in the s, GSEs
dominated the market for risky loans. In written analyses reviewed by the FCIC staff
and sent to Commissioners as well as in a number of interviews, Pinto has argued
that the GSE loans that had FICO scores below , a combined loan-to-value ratio
greater than , or other mortgage characteristics such as interest-only payments
were essentially equivalent to those mortgages in securitizations labeled subprime
and Alt-A by issuers.
Using strict cutoffs on FICO score and loan-to-value ratios that ignore risk layer-
ing and thus are only partly related to mortgage performance (as well as relying on a
number of other assumptions), Pinto estimates that as of June , ,  of all
mortgages in the country—. million of them—were risky mortgages that he de-
fines as subprime or Alt-A. Of these, Pinto counts . million, or , that were

purchased or guaranteed by the GSEs. In contrast, the GSEs categorize fewer than
 million of their loans as subprime or Alt-A. 
Importantly, as the FCIC review shows, the GSE loans classified as subprime or
Alt-A in Pinto’s analysis did not perform nearly as poorly as loans in non-agency sub-
prime or Alt-A securities. These differences suggest that grouping all of these loans
together is misleading. In direct contrast to Pinto’s claim, GSE mortgages with some
riskier characteristics such as high loan-to-value ratios are not at all equivalent to
those mortgages in securitizations labeled subprime and Alt-A by issuers. The per-
formance data assembled and analyzed by the FCIC show that non-GSE securitized
loans experienced much higher rates of delinquency than did the GSE loans with
similar characteristics.
In addition to examining loans owned and guaranteed by the GSEs, Pinto also com-
mented on the role of the Community Reinvestment Act (CRA) in causing the crisis,
declaring, “The pain and hardship that CRA has likely spawned are immeasurable.” 