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the commitments. In a press release in 2003, for example, Fannie reported that it
had acquired $394 billion in CRA loans, about $201 billion of which occurred in
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2002. Th is amounted to approximately 50 percent of Fannie’s AH acquisitions for
that year.
In the Triggers memo, based on his research, Pinto estimated that Fannie and
Freddie purchased about 50 percent of all CRA loans over the period from 2001
to 2007 and that, of the balance, about 10-15 percent were insured by FHA, 10-15
percent were sold to Wall Street, and the rest remain on the books of the banks that
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originated the loans. Many of these loans are likely unsaleable in the secondary
market because they were made at rates that did not compensate for risk or lacked
mortgage insurance—again, the competition for these loans among the GSEs, FHA
and the banks operating under CRA requirements inevitably raised their prices and
thus underpriced their risk. To sell these loans, the banks holding them would have
to take losses, which many are unwilling to do.
What are the delinquency rates? Under the Home Mortgage Disclosure Act
HMDA), banks are required to provide data to the Fed from which the delinquency
rates on loans that have high interest rates can be calculated. It was assumed that
these were the loans that might bear watching as potentially predatory. When Fannie
and Freddie, FHA, Countrywide and other subprime lenders and banks under CRA
are all seeking the same loans—roughly speaking, loans to borrowers at or below
the AMI—it is likely that these loans when actually made will bear concessionary
interest rates so that their rate spread is not be reportable under HMDA. It’s just
supply and demand. Accordingly, the banks that made CRA loans pursuant to their
commitments have no obligation to record and report their delinquency rates, and
as noted above several of the large banks that made major commitments recorded
by the NCRC told FCIC staff that they don’t keep records about the performance of
CRA loans apart from other mortgages.
However, in the past few years, Bank of America has been reporting the
performance of CRA loans in its annual report to the SEC on form 10-K. For
example, the bank’s 10-K for 2009 contained the following statement: “At December
31, 2009, our CRA portfolio comprised six percent of the total residential mortgage
balances, but comprised 17 percent of nonperforming residential mortgage loans.
Th is portfolio also comprised 20 percent of residential net charge-off s during 2009.
While approximately 32 percent of our residential mortgage portfolio carries risk
mitigation protection, only a small portion of our CRA portfolio is covered by
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this protection.” Th is could be an approximation for the delinquency rate on the
merger-related CRA loans that the four banks made in fulfi lling their commitments,
but without defi nitive information on the number of loans made and the banks’
current holdings it is impossible to make this estimate with any confi dence. In a
letter from its counsel, another bank reported serious delinquency rates on the loans
made pursuant to its merger-related commitments ranging from 5 percent to 50
percent, with the largest sample showing a 25 percent delinquency rate.

158 “Fannie Mae Passes Halfway Point in $2 Trillion American Dream Commitment; Leads Market in
Bringing Housing Boom to Underserved Families, Communities” http://fi ndarticles.com/p/articles/
mi_m0EIN/is_2003_March_18/ai_98885990/pg_3/?tag=content;col1.
159 Triggers memo, p.47.
160 Bank of America, 2009 10-K, p.57.