JPMorgan rolls out next prime-jumbo MBS deal totaling $297M

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JPMorgan Chase is adding to its industry-leading production of prime-jumbo mortgage-backed securities with a $297.25 million offering in its 14th deal of the year.

JPMorgan Mortgage Trust 2019-10 is a securitization of 388 prime-quality, large-loan mortgages that are mostly considered non-conforming, but meet qualified-mortgage (ability-to-repay) standards of the Consumer Financial Protection Bureau.

The capital stack includes $261.4 million in super-senior notes across five tranches (each with a corresponding interest-only tranche following in the payment waterfall) along with a single supporting senior note tranche totaling $18.77 million. All of the Class A note tranches carry preliminary AAA ratings from Kroll Bond Rating Agency, which has applied an expected loss of 5.1% on the senior notes.

JPMorgan acquired the loans from the broker channels of various third-party jumbo loan sellers including United Shore Financial Services (76.3% of the loan pool balance), loanDepot.com, Provident Funding Associates and LendUS.

JPMorgan has priced over $6 billion in prime-jumbo RMBS deals this year, more than twice that of the next-largest volume sponsored by Redwood Trust ($2.7 billion across eight deals). Year-to-date volume tops $21.6 billion, according to data from Finsight.

The average borrower of the loans in the pool has a median income of $243,396, a weighted average FICO of 754 and a debt-to-income ratio of 34.1% on their mortgages. (Borrowers also have enough reserves to cover 47 months of payments and interest, according to Kroll).

The loans, with an average balance of $772,274, have an original loan-to-value ratio of 69.5%. About 38% are purchase loans, 37.6% are for refinancing and 24.1% have been underwritten to take out cash equity from the homes.

All of the loans are full-documentation loans, and none are older than 24 months. A small portion of the loans (3.1% of the pool) are agency/GSE eligible, according to Kroll.

All of the loans will eventually be serviced by JPMorgan.

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