A steady buildup of bad mortgages at Newport Beach-based Downey Financial Corp. continued last month as the savings and loan operator reported that 14.3% of its assets were “non-performing” as of May 31, up from 13.3% at the end of April.
The rise in mortgages that are in or near default is a months-long trend for Downey, which, like other lenders, is dealing with fallout from the mortgage crash of 2007.
The company’s bad mortgages are up from 10.8% in February and 11.9% in March. In May 2007, bad loans were 1.3% of Downey’s assets.
The thrift operator had nearly $13 billion in assets as of May 31.
Concerns about mortgages at Downey have driven down the company’s shares some 90% in the past year.
Investors seemed to have expected another rise in bad loans, as Downey’s shares closed flat in New York trading on Friday with a market value of about $140 million.
The majority of Downey’s bad loans are adjustable-rate mortgages that reset at higher rates, making it harder for borrowers to pay.
The company has been renegotiating loans with some of its borrowers. Eighty-six percent of reworked loans are up to date on payments, according to Downey.
