JPMorgan getting back in the RMBS game

New securities would be bank's first “house transaction” since the financial crisis

New York /
Mar.March 16, 2016 03:50 PM

JPMorgan Chase is dipping back into the mortgage-backed securities market in the banking giant’s first “house transaction” since the financial crisis.

JPMorgan is expected to price a new residential mortgage-backed securities deal, which would pass along most of the credit risk on $1.9 billion in mortgages owned by the bank, over the next two weeks. JPMorgan would hold 90 percent of the deal, keeping the most senior tranches, while selling off riskier pieces to investors.

The deal would be JPMorgan’s first “house transaction,” entirely backed by mortgages it owns, since the financial crisis, according to the Wall Street Journal. The pool backing the securities includes a mix of more than 6,000 mortgages, around 75 percent of which conform with Fannie Mae and Freddie Mac underwriting standards.

While banks issued trillions in bonds backed by home loans in the years leading up to the financial crisis in 2008, the mortgage-backed securities market has been largely left to government-sponsored entities like Fannie and Freddie in the years since.

Financial institutions issued nearly $62 billion in private mortgage bonds last year, up from more than $51 billion in 2014 but a fraction of the $1.2 trillion issued in 2005, at the peak of the housing bubble.

Fannie Mae and Freddie Mac have recently sold new mortgage-backed securities that use derivatives to reduce the risk of default on mortgages they guarantee. [WSJ]Rey Mashayekhi


Related Articles

arrow_forward_ios
Mortgage applications reach pandemic peak

Mortgage applications reach pandemic peak

Mortgage applications reach pandemic peak
One New York Plaza, One Madison Avenue and 605 Third Avenue top the list of largest real estate loans. (Brookfield, Wikimedia Commons, Fisher Brothers)

These were the largest Manhattan real estate loans in December

These were the largest Manhattan real estate loans in December
(Getty)

Mortgage applications fall during holidays even as rates sink

Mortgage applications fall during holidays even as rates sink
(iStock)

China limits property loans to curb housing bubble

China limits property loans to curb housing bubble
Home purchase applications are down due to high prices.

Mortgage applications fall as home prices soar

Mortgage applications fall as home prices soar
The Mortgage Bankers Association reported an increase in applications for home loans during the second week of December 2020. (iStock)

Mortgage applications rise as rates reach another record low

Mortgage applications rise as rates reach another record low
Future of Fannie, Freddie privatization is uncertain

Future of Fannie, Freddie privatization is uncertain

Future of Fannie, Freddie privatization is uncertain
From left: The Grace Building, 250 West 57th Street, 32-42 Broadway, and One Union Square South (Photos via Wikipedia Commons, ESRT, Google Maps, and StreetEasy)

These were the largest Manhattan real estate loans in November

These were the largest Manhattan real estate loans in November
arrow_forward_ios

The Deal's newsletters give you the latest scoops, fresh headlines, marketing data, and things to know within the industry.

Loading...