OK, WHO MADE THE LOUSY LOANS?

(h/t Atrios)

Calculated Risk found an interesting report from the Federal Reserve Bank of San Francisco that points out that the culprits weren't the government agencies nor the regular banks. Here's an informative chart:



And here's the accompanying explanatory text:

Figure 1 shows some of the important differences between GSE-owned or guaranteed mortgages and mortgages that were securitized through non-agency channels or retained in the original lender's portfolio. The data are from 2006, the peak year for non-agency securitizations. Compared with mortgages purchased by the GSEs, non-agency securitizations were much more likely to involve adjustable-rate mortgages, including option ARMs, to be rated as subprime, and to have less-than-full documentation of borrower income and assets. The median FICO credit score for the non-agency securitizations was about 30 points lower than for the mortgages held or guaranteed by Fannie Mae or Freddie Mac and much closer to the credit scores typically associated with loans guaranteed by Ginnie Mae. Compared with Ginnie Mae, however, the non-agency securitizations tended to involve a much greater share of adjustable-rate mortgages. Indeed, in 2006, non-agency securitizations appear to have gained market share by partially displacing Ginnie Mae's position among borrowers with low credit quality and expanding into the market for jumbo loans, which exceed GSE size limits.