JPMorgan Returns to Jumbo MBS Market

JPMorgan is returning to the private label residential mortgage-backed securities market and EverBank has entered it, according to presale reports from Fitch.

According to Fitch, the JPM deal—JPMorgan Mortgage Trust, Series 2013-1—is backed by a “high-quality mortgage pool” of jumbo collateral totaling about $616.3 million and has “strong counterparties,” but also has a “weak representation and warranties framework” and a “limited alignment of interests.”

“It’s a very good pool,” Fitch managing director Roelof Slump told this publication. But the credit enhancement requirements would not have been so high had its rep and warrant framework been relatively stronger, the presale report on the deal notes.

Both Fitch and Moody’s Investors Service recently have shown concern about weak reps in warrants relative to recommended industry best practices in some deals they have been asked to size up, but which have not necessarily made it to market.

Fitch expects to assign ratings to eight of the JPM deal’s nine classes that range from its top investment grade rating of AAAsf to a speculative grade BBsf rating.

The EverBank deal—EverBank Mortgage Loan Trust 2013-1—is backed by 383 loans with a total balance of $308.4 million as of the cutoff date.