Production of jumbo mortgages at First Republic Bank and Flagstar Bank increased on a sequential basis in the third quarter. Volume was driven by refinances as interest rates fell during the quarter.

JPMorgan Chase Bank issued a deal this month that looks like it will meet requirements for favorable capital treatment by the OCC. The transactions could prompt similar issuance by other banks.

Several borrowers are opting for mortgages with balances right at the conforming loan limit even though interest rates on jumbos are often lower. Relatively tight underwriting standards for jumbos look to be the cause.

Presale reports for nearly a dozen non-agency MBS have been published in the last two weeks, including three deals from JPMorgan Chase.

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.

After contributing loans to various prime non-agency MBS in recent years, Quicken Loans is set to issue the first deal on its own shelf.

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.