80/20 Stated EPDs Hurt Pennsylvania Bank

Fulton Financial Corp. of Pennsylvania said it will take a $5.5 million pretax charge in the first quarter because of early payment defaults on 80/20 stated-income loans it sold into the secondary market.The publicly traded depository said it has been asked to repurchase $22 million in 80/20 loans, all of which were funded last year. (The minimum Fair Isaac & Co. credit score on the product was 620.) Another $72 million in these loans are "subject to potential repurchase," it said in a statement. The bank suspended the loan program in February after having originated $247 million in such loans in 2006, and another $22 million this year. The loans were sold to secondary investors by FFC's affiliate, Resource Bank. The investors were not identified. FFC is based in Lancaster.