Where the securities had been heavily structured or leveraged, these losses have in some cases been severe. Further, many banks financed nonbank firms that originated these assets through "mortgage warehouse" lines of credit or through repurchase agreements. As the banks saw the values of the financed mortgages falling last year, their margin calls put a number of originators out of business.
Most recently, home equity lending has emerged as a more challenging area. As banking organizations report increased delinquencies and losses in home equity lines of credit (HELOCs), especially in light of falling housing prices in some markets, we continue to monitor current and potential exposures, and are reviewing the industry's collateral valuation methods.