S&P Sees Drop in Jumbo RMBS Issuance

The overall volume of originations and loan securitizations will likely decline 30% this year in the prime jumbo mortgage sector, from $225 billion in 2004 to $160 billion, according to Standard & Poor's Ratings Services.The report, titled "Trends in U.S. Residential Mortgage Products: Jumbo Sector Fourth-Quarter 2004," says the reduction in the number of deals should be less than 30%, however, as a result of several factors. They include continued house price appreciation; the introduction of new mortgage products; efficiencies in deal execution; and a shift in origination and securitization from fixed-rate mortgages and hybrid adjustable-rate mortgages to ARMs with no initial fixed-rate period and IO mortgage product. "Over the past few years, many issuers have chosen to issue more deals backed by smaller, more homogeneous collateral pools," said Steve Tencer, a director in S&P's residential mortgage group, and co-author of the article. ".... We expect this form of issuance to gain momentum and continue the trend of smaller, more-targeted issuance patterns." The report is available on RatingsDirect, S&P's Web-based credit analysis system, at http://www.ratingsdirect.com.