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
From left: Black Knight CEO Anthony Jabbour and Intercontinental Exchange CEO Jeffrey Sprecher (Black Knight, Intercontinental Exchange, iStock)
Intercontinental Exchange expands mortgage play with $13B Black Knight buy
Intercontinental Exchange expands mortgage play with $13B Black Knight buy
Nima Ghamsari, co-founder, Blend Labs (Blend Labs, iStock)
Mortgage tech firm lays off 200 as rates surge, industry slumps
Mortgage tech firm lays off 200 as rates surge, industry slumps
From left: Richard Benson-Armer, chief people, performance and culture officer, Better.com; Vishal Garg, CEO, Better.com (Activant Capital, Better.com, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
“Prudent and necessary”: More layoffs at Better.com
“Prudent and necessary”: More layoffs at Better.com
JPMC CEO Jamie Diamon and rendering of new Park Avenue HQ (DBOX / Foster + Partners, Getty Images, Illustration by Kevin Cifuentes for The Real Deal)
JPMorgan Chase reveals HQ plans after nod to remote work
JPMorgan Chase reveals HQ plans after nod to remote work
Movement Mortgage CEO Casey Crawford (Movement Mortgage, iStock)
More mortgage lenders lay off staff as rates rise, applications slow
More mortgage lenders lay off staff as rates rise, applications slow
Better.com CEO Vishal Garg (Getty Images, iStock/Photo Illustration by Steven Dilakian for The Real Deal)
Better.com floats voluntary resignations after mass layoffs
Better.com floats voluntary resignations after mass layoffs
Sotheby's International Realty's Nikki Field and Compass' Diana Sutherlin (The Field Team, Compass, iStock / Photo illustration by Priyanka Modi for The Real Deal)
What brokers are seeing as mortgage rates climb
What brokers are seeing as mortgage rates climb
JPMorgan Chase CEO Jamie Dimon and a rendering of 270 Park Avenue (Getty, ATCHAIN)
Jamie Dimon to work-from-homers: You win
Jamie Dimon to work-from-homers: You win
arrow_forward_ios

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

Loading...