WSJ: Troubled Loans Increase 49% Federally Regulated Thrifts

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WASHINGTON -- Mortgage defaults were roiling the thrift industry even before the recent turmoil in the subprime-loan market, government data show.

Troubled assets -- loans that were 90 days or more past due or had been repossessed -- at federally regulated savings-and-loan associations in the second quarter rose 49% from a year earlier to the highest level in 14 years, according to the Office of Thrift Supervision.

The agency also said that the number of "problem thrifts," or companies rated poorly by regulatory standards, had risen to 10, up from four in the second quarter of 2006.

Still, officials said that while the 836 regulated thrifts continue to feel stress from housing and liquidity markets, their overall health remains strong, based on earnings and capital.

The thrifts make one of every four mortgages, specializing in prime or jumbo loans. Stress in their loan portfolios suggests that more types of loans -- not just subprime mortgages -- are under pressure.

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