New Jersey “jumbo” borrowers – those with loans for as much as $729,750 — are falling behind on their monthly mortgage payments and staying behind, according to New York City-based credit ratings agency Fitch Ratings.

Borrowers in New Jersey who were 60 days or more behind in their bills tripled in December, compared to the same period in 2008. More than 7 percent of “jumbo” borrowers were delinquent by at least two months in the last month of 2009.

Jumbo refers to debts that are too large to be bought by government-supported lenders of last resort such as Freddie Mac or Fannie Mae.
(more…)

jumbo mortgage · unemployment rate

Losses on 2008 vintage to exceed 12% as future loss severity averages 50%.

Moody’s now expects cumulative lifetime loss projections for US prime residential jumbo mortgage backed securities (RMBS) of 3.8% for 2005 securitizations, 8.0% for 2006 securitizations, 10.9% for 2007 securitizations and 12.3% for 2008 securitizations.

“Since our previous loss projections published on March 2, serious delinquencies (defined as loans that are 60 or more days delinquent, in foreclosure, or held for sale, i.e. real estate owned or REO) on prime jumbo pools for the 2005, 2006, 2007 and 2008 vintages have increased substantially to 3.3% from 2.2%, 6.2% from 3.8%, 7.9% from 4.8% and 8.0% from 4.6%, respectively. We expect delinquencies and losses on prime jumbo pools to continue to rise in 2010 as house prices continue to decline and unemployment levels continue to rise. In the previous loss projection update we expected these key macroeconomic variables to moderate by the end of 2009.”
(more…)

foreclosures · jumbo mortgage

Delinquencies on jumbo mortgages nearly tripled to 9.2% in December 2009 compared to the 3.2% rate December 2008 as the inventory of expensive homes continues to rise, according to a report from Fitch Ratings. This should not be much of a surprise to the banks that allowed option adjustable-rate mortgages and interest-only mortgages to be concentrated in the high-cost housing market.

Interest-only loans were commonly used to purchase homes valued at $750,000 or more. These exotic jumbo mortgages allowed borrowers to postpone making principle payments for three, five or seven years, but now those interest-only periods are ending, and the loans are beginning to reset to much higher payments.

At the same time, many of the white-collar workers who took the loans are facing job losses or cuts in their cash bonuses. If Wall Street bonuses shift from predominately cash to higher portions of stock that must be held for several years, the high-end housing market likely will face an even big shock.
(more…)

foreclosures · jumbo mortgage

The market for “private-label” mortgage-backed securities stopped two years ago when rising defaults destroyed investors’ appetite for the bonds. But is sentiment starting to shift?

The answer may come soon. According to securities analysts, some underwriters on Wall Street are discussing the possibility of bringing small quantities of private-label mortgage securities to market within a few months. The first such sales are likely to consist of securities backed by high-quality jumbo mortgages, loans too big to be backed by government agencies.

The securitization market “for newly originated mortgage loans is getting closer to reopening” says Tom Deutsch, executive director of the American Securitization Forum, an industry group. Bryan Whalen, a managing director at Trust Co. of the West, says Wall Street dealers have been having “hypothetical” chats with investors about possible deals. Mr. Whalen estimates that the first offering could perhaps total $250 million to $500 million and debut during the first quarter of this year.
(more…)

jumbo mortgage · subprime mortgages