The jumbo market was humming along at the start of the year until volatility from the coronavirus disrupted lending in March. Originations of jumbos declined sharply and the sector lost market share. (Includes data chart.)

Redwood took a $943 million loss in the first quarter amid volatility from the coronavirus. The REIT laid off about 35% of its employees in April, among other adjustments.

Underwriting standards are tighter and there are fewer lenders in the market, but jumbo mortgages are still being originated.

Four of the top five originators of mortgages included in prime non-agency MBS can’t retain originations in portfolio and the market isn’t expected to rebound in the coming months. (Includes two data charts.)

A cap imposed by the Fed on Wells’ portfolio was a major factor in its decision to stop originating jumbos through correspondents.

Following in the footsteps of Wells, a handful of correspondent aggregators have suspended originations of jumbo mortgages. Underwriting standards for the loans also have tightened.

First Republic Bank doesn’t plan to chase market share even as other jumbo lenders tighten underwriting standards.

The top five producers of jumbos continue to offer the mortgages. The production picture is less clear at nonbanks, which don’t have portfolio capacity.

Non-agency loans account for about 30% of all residential mortgages outstanding and, unlike with servicing for the GSEs or government-insured mortgages, there’s no standardization in how servicers will respond to borrowers facing financial difficulties tied to the coronavirus.

After a surge in February, the issuance of non-agency MBS has all but ground to a halt due to financial turmoil caused by the coronavirus.