At a time when many mortgage bankers are objecting to the idea of retaining 5% of the credit risk for mortgages they securitize, Union Bank in San Francisco says it has no problem with risk retention — even on brokered loans, largely because it targets affluent borrowers.
"Union is 100% risk retention," said James Francis, an executive vice president and head of consumer lending at the $79.1 billion-asset Union. "We always held the mortgages in our portfolio so if we mess up, we don't blame anyone else."
According to figures compiled by National Mortgage News and the Quarterly Data Report, Union is one of the five largest jumbo lenders in the U.S.
Union's portfolio of residential mortgages rose 4.5%, to $17.6 billion, last year. It is a unit of UnionBanCal Corp., which in turn is a subsidiary of Mitsubishi UFJ Financial Group of Japan.
Like most portfolio lenders, Union is heavily skewed toward jumbo loans, primarily "5/1" hybrid adjustable-rate mortgages whose rates are fixed for the first five years and thereafter adjust annually. This suits the bank's funding mix, Francis said. About 2% to 3% of its residential loans are sold to the GSEs.
