AIG Originated $15.6B in '05 Before OTS Balked

AIG Federal Savings Bank, which recently signed a supervisory agreement with the Office of Thrift Supervision, originated $15.6 billion in one- to four-family loans in 2005 while working as a mortgage conduit for two subprime lending affiliates before the OTS intervened.Home Mortgage Disclosure Act data show that AIG FSB, Wilmington, Del., originated $15.6 billion in one- to four-family loans in 2005 and $10.0 billion of the loans were classified as higher priced, which generally implies subprime loans. As previously reported, the federally chartered thrift -- along with American International Group subsidiaries American General Finance, Evansville, Ind., and Wilmington Finance, Plymouth Meeting, Pa. -- agreed to establish a $128 million rescue fund to help borrowers avoid foreclosure. The OTS contended that the AIG thrift, which has $1.2 billion in assets, failed to monitor the mortgage lending activities it outsourced to Wilmington Finance to ensure consumer protections.