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.
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jumbo mortgage · subprime mortgages