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Chase Increasing Issuance of Jumbo MBS with High-LTV Ratio Loans

July 11, 2019Brandon Ivey

JPMorgan Chase is preparing to issue its second jumbo mortgage-backed security of the year with mortgages that have relatively high loan-to-value ratios. In 2018, Chase only issued one deal with such loans.

The average combined LTV ratio on the planned $385.28 million issuance is 87.9%. Mortgages with such high LTV ratios are uncommon in the jumbo MBS market. According to Inside Nonconforming Markets, the average combined LTV ratio on prime jumbo MBS issued in the first quarter of 2019 was 72.6%.

DBRS, which placed preliminary AAA ratings on the MBS, noted that there are compensating factors for the higher LTV ratios. "The high LTV attribute of this portfolio is mitigated by certain strengths, such as high FICO, low debt-to-income ratio, robust income and reserves, as well as other default drivers," the rating service said.

Some 77.1% of loans in the deal were originated by United Shore Financial Services, the owner of United Wholesale Mortgage. United Shore was also the top contributor to the two previous high-LTV-ratio jumbo MBS from Chase.

Courtesy of Inside Mortgage Finance