The nation's 'mega' banks like Fannie Mae and Freddie Mac about as much as they like credit unions (which isn't much). And as any reader of National Mortgage News knows by now banks (and investment bankers) are major competitors in the secondary market for home mortgages — so it should come as no surprise that depositories have been adding to their mortgage portfolios like crazy the past three years. And it's not just for prime mortgages. Banks, in particular depositories affiliated with a securities firm, have been gobbling up nonconforming mortgages and home equities alike.

The reason is simple: banks can make a nice little spread playing the "carry trade," especially if their cost of funds (deposit accounts) are so low. Even though the Fed overnight funds rates is 3% compared to 1% 18 months ago, banks haven't been all that altruistic when it comes to hiking the interest rate paid on their shorter term accounts which means their profit margins, at least in regard to mortgages, should be somewhat attractive.

But don't misunderstand the situation. Banks have been playing the mortgage carry trade because the commercial loan market has stunk ever since the "dot-com" bust of 2000. As the U.S. economy continued to improve in 2004 and 2005 there were signs that some banks might soon abandon the carry trade or at least reduce how aggressively they compete for mortgages. But make no mistake about it — some banks likely will linger in this market longer than normal because of the wounded condition of Fannie Mae and Freddie Mac. (See table.)

Fannie and Freddie have not only reduced their mortgage holdings, but they are no longer aggressively buying home loans. Enter the banks. How long will this trend continue? It's hard to say. Some banks absolutely love residential mortgages and are quite comfortable hedging the risks. And then there are those banks that are praying that Congress limits Fannie and Freddie's ability to hold mortgages in portfolio because they want an even bigger chunk of the business. In May 2005 Fannie admitted that it had suffered tremendous market share losses in MBS issuance. In a Securities and Exchange Commission filing the GSE said its market share of "mortgage-related" securities fell to 24% in the first quarter of 2005 compared to a 29% share the year before. In 2003 it had a 45% share. Private label issuers had a market share of 54% in the first quarter and 45% share in 2004. (Private label includes MBS backed by subprime, "alt-A," investor loans and other non-conforming mortgages.)

The Rankings in this Chapter

In the pages that follow we offer rankings and profiles on commercial banks by their holdings of one- to four-family mortgages. We also offer rankings on banks by their investments in home equity loans and multifamily mortgages. In the profiles that follow the one-line rankings there is additional information on total real estate-related holdings, including mortgage backed securities held in portfolio and other data points.

It should come as no surprise to see Bank of America, Wells Fargo, J.P. Morgan Chase, and Wachovia at the top of the heap. After all, these banks are among the top players in the residential and commercial loan markets. In total, we offer profiles on 500 commercial banks, including addresses, phone numbers and contact names. The figures were culled from call reports these institutions file with their regulator, the Federal Deposit Insurance Corp. One point to keep in mind: If a bank is holding real estate backed loans on their balance sheet chances are the institution also is servicing the loans. As always, we hope you find these listings helpful and informative.