Jumbo mortgage delinquencies could reach as high as 10 percent, Fitch Ratings reported, as defaults on prime jumbo mortgages continue to rise.

As serious delinquencies climbed for the 32nd consecutive month, loan performance among RMBs’s (private residential mortgage-backed securities) showed continued weakness.

Overall, jumbo mortgage RBMS at a minimum of 60 days past due grew to an astounding 9.6 percent last month, a rise from 9.2 percent the previous month, Fitch’s data shows.

The firm claims prime jumbo mortgage delinquencies accelerated in 2009, although they began to rise in mid-2007, almost tripling throughout the year. Although, Fitch does note that pre-2005 jumbo mortgage loan delinquencies still remain much lower than the most recent originations.
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foreclosures · housing market · jumbo mortgage

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.”
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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.
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foreclosures · jumbo mortgage