The real estate investment trust’s income from the aggregation of jumbo mortgages dropped while its business-purpose lending segment flourished. Margins on jumbos took a hit due to competition in the sector.
Chase was the most active player in the non-agency MBS market in late July, with deals involving jumbos, investment-property mortgages and a risk-sharing transaction.
Issuance of prime jumbo MBS increased by 54% on a sequential basis in the second quarter. Refis accounted for much of jump, including a large amount of loans with a cash-out component. (Includes two data charts.)
Mortgage production increased by 26% in the second quarter on a sequential basis at the jumbo-focused First Republic Bank. And lock volume declined by 15% at Redwood.
Toorak Capital Partners expanded its securitization activities into 30-year mortgages for investment properties. Bayview Asset Management and Goldman Sachs have jumbo MBS in the market, and a number of other issuers are planning deals.
As interest rates declined in 2020, the ARM share of jumbo originations plummeted. Lenders also got more lenient with DTI ratios, while average credit scores and LTV ratios tightened somewhat.
Issuance of non-agency securities increased 81.3% in the second quarter of 2021. Volume was boosted by the spike in deliveries of GSE-eligible mortgages following regulatory changes in the agency market. (Includes data chart.)
Lock volume for planned acquisitions of jumbo mortgages declined in the second quarter at Redwood Trust. Still, officials are optimistic about growth in the non-agency market.
The jumbo servicing market inched up in the first quarter of 2021. The two largest banks in the sector reduced their balances while others expanded their portfolios. (Includes data chart.)