The top four banks in the country, which account for more than half of all mortgage servicing outstanding, also hold most of the second mortgages out there. New numbers compiled by Inside Mortgage Finance show that Bank of America, JPMorgan Chase, Wells Fargo and Citigroup held a combined $117.4 billion in closed-end second mortgages at year-end. As the mortgage industry grapples with loan modifications and other efforts to resolve troubled mortgages, one of the big stumbling blocks has been dealing with second lien holders.

But the top holders of CES mortgages also happen to be the firms looking to modify the most mortgages. Citigroup was the top bank in terms of CES mortgages outstanding at year-end with $36.1 billion. BofA followed close behind with $35.3 billion in second mortgages. Last year’s wave of mergers and acquisitions helped consolidate second liens as Countrywide, Washington Mutual and Wachovia were all absorbed by the top three banks in the country.

Concern about the banking industry’s ability to weather the current economic storm dragged down the stock prices of all the country’s top mortgage lenders this week. Even the “healthier” mega-banks of JPMorgan Chase and Wells Fargo watched their share prices dip below $20 this week as investors questioned their ability to manage their large acquisitions of troubled mortgage lending banks in 2008.

The stock prices of the top four mortgage lenders in the country Bank of America, Wells Fargo, JPMorgan Chase and Citigroup showed signs of stabilizing in morning trading today, but still remained at depressed levels. The short-term outlook for bank stocks appears closely tied to the new steps the Obama administration is expected to unveil later this week. Investors are looking for some sign that the U.S. banking industry is not moving towards some sort of nationalization that could dilute  –if not wipe out–  private-sector investments.

A new survey of real estate agents found that Wells Fargo was rated the “best lender for homebuyers” in the current distressed mortgage lending environment. Meanwhile, Countrywide, which has continued to make loans since its acquisition by Bank of America, was rated the “worst lender for homebuyers.”

The survey, sponsored by Inside Mortgage Finance and conducted by Campbell Communications in early November, asked more than 2,500 respondents to rate the top lenders on such factors as “competent loan officers” and “dependable closings.” Survey findings included that one in about seven home sale contracts were canceled this fall because homebuyers were not able to obtain mortgage financing.

Click here for more info on the new report.