Will Jumbo Conduits Get Their Foot in the Door?

Over the past year I've written a dozen or so stories about so-and-so contemplating the creation of a jumbo conduit. But are any of these 'sounds like a great idea' conduits actually buying anything, and if they are, how much? From what we can tell the only firm actively purchasing jumbos in the secondary market (with an eye toward securitization) is Redwood Trust, which hopes to issue two more private label securities by yearend. But if the Fannie Mae/Freddie Mac loan limits falls to $625k on October 1 (from $729k) we may actually see the “private sector” step in to create a true non-government secondary market. The big question is this: how much more will these jumbo firms charge consumers for non GSE loans? Don't be surprised to discover that it may not be more than 50 basis points…