The first deal from a new jumbo residential mortgage-backed securities issuer since 2013 is taking shape.

The approximately $250 million securitization is backed almost entirely by 30-year fixed-rate mortgages. The loans have a weighted average loan-to-value ratio of about 71% and a 753 weighted average FICO credit score, according to Kroll Bond Rating Agency presale report. The California concentration is at the high end of the range for this market but in line with another recent deal, a JPMorgan transaction issued in February. The highest California concentration seen to date in the post-crisis jumbo MBS market is 74%, Patterson says.

"The LTVs are on the high side of what we typically see and the FICOs are on the low side," Kroll Bond Ratings analyst Michele Patterson says of WinWater Home Mortgage LLC's first deal. Even the lower credit scores and the higher LTVs found in the current, credit-sensitive post-crisis jumbo market, represent historically strong credit. However, loan shortages and mounting competition have pressured market participants to loosen underwriting slightly.

WinWater's loan aggregation facility only geared up last year, which means there is very little in the way of a track record to judge it by, Patterson notes. However, most originators that individually contribute at least 5% of the loans to the deal do have a track record in securitization, having provided collateral for other recent jumbo transactions, she says.

The deal suggests some revival of interest in jumbo residential mortgage-backed securities issuance but it's unclear whether there will be any other transactions from new issuers in the immediate future, Patterson says.

"There's a lot of interest in the market. We've talked to a number of newer players that would like to enter the space, but we've been talking to them for a while," she says. "I don’t know if we'll see anything (from more new issuers) before the fourth quarter."

There have been six jumbo securitizations this year, including WinWater's, compared to 25 done at this time last year, says Patterson.

"The market has slowed down significantly. I think this is just a sign that there's interest in helping bring the market back," she says.

Among the types of private-label residential mortgage-backed securities transactions the market could see this year include more REO-to-rental securitizations. Also, analysts expect to see some deals backed by mortgages that fail to meet the qualified mortgage criteria needed to obtain a higher degree of regulatory liability protection from ability-to-repay rules.

The WinWater deal does contain some loans originated after Jan. 10 when ability to repay rules took effect, but all those loans fit within QM criteria, Patterson says.

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