Good morning all!
Happy Monday.
So, I am sipping my morning coffee, enjoying the nice weather of the day reading news on secondary market bundling and sale of non-conforming (jumbo) mortgages.
Seeing some sales is good news as the entire secondary market for these mortgages literally vanished in late 2008. Zippo. Gone!
As the credit quality of these securities is now better from the tighter underwriting and rigid auditing on the new loan originations we are seeing market forces, investors seeking yield, come back.
What's happened of late?
Well, JP Morgan recently priced a deal of $570 million. Everbank, a lender in Florida, had their first issuance of $308 million. There deal was comprised of 30 and 15 year fixed rate mortgages. Redwood Trust, a REIT in California, sold their 4th deal of the year. Wells Fargo and Credit Suisse are working on new offerings as well.
These are good signs as these secondary market operations come back. We all benefit from an active marketplace that will act as a conduit to bring capital to non-conforming mortgages and keep those rates low.
Now, let's keep this in perspective. In 2012, the mortgage market was a $1.8 trillion marketplace but only 10% of it was non-agency (Freddie Mac, Fannie Mae, Ginnie Mae, FHA, VA) paper.
Have a great week!
Brett
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