JPMorgan Chase Bank has created a synthetic credit-linked note to transfer credit risk on a pool of jumbo mortgages. Unlike traditional MBS, loans in the transaction will remain on the bank’s balance sheet.
Issuance of non-agency MBS slowed near the end of the third quarter but presale reports for a number of deals have been published this month and more securities are on the way.
Denial rates on jumbo mortgages varied in 2018. Denials of applications for purchase mortgages declined while those for refis increased. Denial rates also differed widely among banks and nonbanks. (Includes one data chart.)
Servicing portfolios stocked with jumbo mortgages continued to steadily increase in the second quarter. However, portfolio growth at the top two servicers hasn’t kept pace with the market overall.
Among the top five states for originations of non-agency jumbos in 2018, production increased only in Florida on an annual basis. California remains the top state for jumbo lending.
The top correspondent sellers of jumbo mortgages vary in where they sell loans. About half of sales in 2018 were to banks, about a third went to nonbanks and the rest was delivered directly to non-agency MBS.
Activity in the non-agency MBS market is resuming after a slowdown in the second half of August. Presale reports for five deals have been published this month, led by prime non-agency MBS.
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