``Another fact to keep in mind: BKUNA’s loans were all “prime.” They didn’t do FICOs below 700. So the bank’s sh*tty numbers are yet more evidence that high credit scores are a bad indicator of loan performance, especially when borrowers are in a negative equity position. BKUNA’s loan book was largely made up of option ARMs in Florida/California/Arizona on which borrowers were making minimum payments. This means their loan balances have been growing even as house prices have cratered. That’s a recipe for negative equity.''

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