BlackRock hopes to invest upwards of $1 billion in jumbo mortgages with the hope of eventually issuing securities backed by the loans, according to secondary market officials familiar with the plan.
If it cannot securitize the product right away, it may issue participation certificates backed by the underlying loans.
At press time, BlackRock had not returned a telephone call about its plan, which was first reported by Reuters.
The company was founded by Larry Fink, a pioneer in the MBS market.
In the spring Redwood Trust, a publicly traded REIT, issued a $222 million jumbo MBS, the first such securitization in 18 months. But since that bond came to market, no other nonconforming deals have been structured.
Several companies are rumored to be working on jumbo conduits, but few have publicized the fact.
Redwood hopes to come to market with a second jumbo offering early next year.
In related news, a Bloomberg report said that Walter Investment Management Corp. might issue $220.5 million of securities backed primarily by seasoned installment contracts that are for financing residential properties.
The sale, according to Bloomberg, will be backed by a $324.2 million pool of assets including $61.2 million of residential mortgages. It is being managed by Bank of America Corp., the report said.
Installment contracts are usually used to fund the purchase and building of manufactured or modular housing, instead of mortgages, Bloomberg reported.
Based in Tampa, Fla., Walter Investment is an asset manager, mortgage servicer and mortgage portfolio owner focusing in nonconforming, less-than-prime, as well as other credit-challenged mortgage assets. The firm now has $1.8 billion of assets under management and annual revenues of around $180 million.