Amid rising home prices across the country, lenders are issuing an increasing number of jumbo mortgages, as well as bundling them into securities, CNBC reported. The number of these loans, which tend to be popular in pricey real estate markets like Manhattan, increased 15 percent in the first quarter of 2013 compared to the same period last year. More striking was the 400 percent year-over-year spike in the number of jumbo loans securitized and sold by lenders.
In light of the demand, there are also new players on the jumbo loan scene. Credit Suisse and Redwood Trust were previously the only lenders present in the market, and each had only a small presence. But Chase Mortgage is ramping up its operations, rising to the No. 4 spot for jumbo loan origination from No. 2.
“We think over time it is important that private capital gets back into the mortgage business, and as guarantee fees (charged by Fannie and Freddie) have continued to increase over the last couple of years, the economics are right to start to bring that private capital back into the mortgage market,” Chase Mortgage CEO Kevin Watters told CNBC.
However, investors have been slow in returning to this market, Watters said, primarily due to the difficulty of figuring out their securitization standards.
“We are not slicing and dicing any loans,” Watters told CNBC. “We’re selling loans as whole loan products.” [CNBC] —Zachary Kussin