JPMorgan Preps Another RMBS with Mix of Conforming, Jumbo Loans

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JP Morgan Chase is marketing another offering of bonds backed by a mix of conforming and jumbo residential mortgages, according to Moody’s Investors Service. 

The bank is once again selling the bulk of tranches to be issued in the $1.10 billion deal, as it did in its previous deal, completed in February.

The credit quality of the collateral is similar to that of previous JPMMT transactions backed by 30-year fixed-rate mortgages according to Moody's.

The prime jumbo borrowers have high income (WA $22,178/month), significant liquid assets (weighted average of $225,061) and a stable employment history (10 years), all of which have been verified as part of the underwriting process and reviewed by the thirdparty review firms. The majority of the prime jumbo borrowers (70%) have more than 24 months of liquid cash reserves. All the loans are subject to the Qualified Mortgage  and Ability-to-Repay rules and are categorized as QM - Safe Harbor.

The conforming loans have an average balance of $498,036 compared to the average GSE loan balance of $230,000. More than 80% of the conforming loans are backed by single-family properties or PUDs. The higher conforming loan balance of loans in JPMMT 2017-2 is attributable to the greater amount of properties located in high-cost areas, such as the metro areas of Los Angeles, San Francisco and New York City. These loans were underwritten pursuant to GSE guidelines and were approved by DU/LP.

Chase will be the servicer on the conforming loans, while Shellpoint Mortgage Servicing, Everbank and PHH Mortgage will be the servicer on the prime jumbo loans. Wells Fargo Bank will be the master servicer.

Moody's expected losses on the pool to average 0.40% in a base-case scenario.

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