The great land rush to riches in the Jumbo securitization market appears to have hit a brick wall.

According to a confidential report prepared by one private analytics firm, “several” conduits formed over the past year have been shuttered, their investment capital returned to investors.

The report – provided to ASR sister publication National Mortgage News under the condition its author not be disclosed – counts roughly 20 firms that either formed a jumbo conduit or laid the groundwork to do so.

The list includes AIG, Chimera Funding, FBR Capital Markets, MetLife, PIMCO, among others.  It’s unclear which conduits have closed and which ones are still technically open.

Over the past three years only one firm, Redwood Trust, has issued Jumbo MBS in the public market. (There have been a few private deals, MBS investors told NMN.)

This year Redwood anticipates issuing six Jumbo bonds. In the fourth quarter the publicly traded REIT posted a small loss.

The report cites five main reasons why the Jumbo MBS market has not taken off, including a flat yield curve and a “strong bid” by regional banks.



Subscribe Now

Access to a full range of industry content, analysis and expert commentary.

30-Day Free Trial

No credit card required. Access coverage of the securitization marketplace, including breaking news updated throughout the day.