The acquisition of Washington Mutual by JPMorgan Chase will likely make JPMorgan into more of a powerhouse in RMBS issuance.

 

Even without WaMu’s help, JPMorgan already placed thirdin the issuer non-agency league tablefor 1H08 with $2.8 billion in proceeds and a 7.7% market share, according to data from Thomson Reuters. For the entire 2007, JPMorgan placedfourth with $53.4 billion in proceeds and a 7.8% market share.

 

Although WaMu did not place in terms of the mortgage issuer rankings for 1H08, it ranked sixth in the residential MBS issuer league table for 2007, garnering a5.3% market share and $36.32 in proceeds.

 

In fact, a report from ASR sister publication National Mortgage News Online said that the WaMu purchase makes Chase, which is the official name of JPMorgan's lending unit, the number oneresidential lender.

 

Figures compiled by National Mortgage News and the Quarterly Data Report showed that combined, Chase and WaMu funded $73.4 billion in home mortgages in 2Q08, which bypasses second ranking Wells Fargo that produced $65.3 billion.

 

Chase actually originated $62.1 billion during the quarter without WaMu’s help. Even if Chase is currently the number one home funder, it is still well behind Bank of America when it comes to servicing rights.

 

On June 30, Bank of Americathat now owns Countrywide and Merrill Lynch's mortgage divisions managed $2.086 trillion in residential servicing rights — the figure includes BoA, Countrywide, and Merrill's two platforms and the EMC Mortgage division of Bear Stearns.

 

According to National Mortgage News, with WaMu, Chase now has $1.45 trillion in housing receivables, placing it as third in the nation, behind BoA and Wells Fargo ($1.496 trillion).

 

In other mortgage-related activity, in September 2006, Washington Mutual came to market with the first covered bond program by a U.S. issuer, atlhtough the deal was marketed overseas. The Washington Mutual Covered Bond Program (WMCBP) allowed the Seattle-based bank to float about $25.6 billion of senior debt secured by a portfolio of mortgage bonds.

 

Just today Fitch Ratings upgraded the outstanding series of covered bonds issued by WMCBP  to ‘AA-’ from ‘BBB+’. The rating agency has also placed WMCBP on Rating Watch Positive. The rating action comes after JPMorgan Chase’s acquisition of most of Washington Mutual Bank’s assets as well as select otherliabilities,whichinclude WaMu’s obligations under its mortgage bonds.

 

Fitch noted that these mortgage bonds are owned by WMCBP and are securing WMCBP’s coveredbonds.Theupgrade reflects the financial strength of the new obligor JPM. JPM's long-term IDR affirmed at ‘AA-’ by Fitch earlier today.

 

The rating agency believes that its highly probably the WMCBP's outstanding debt will be ratedaboveJPM’sIDR. This expectation isbasedonthestrengthofthe segregation mechanismthroughthe pledge, according to the Uniform Commercial Codeprotection against liquidity shortfall in the event of a default by thefinancialinstitution. Also, Fitch noted JPM’s servicingcapacities and the level of overcollateralization between the pledged mortgage pool and the covered bonds.

 In other rating actions, Fitch also downgraded and affirmed ratings assigned to the Washington Mutual Master Note Trust and Washington Mutual Master Trust classes detailed below. The downgrades affect 18 tranches of notes totaling roughly $7.95 billion and are based on performance deterioration of the underlying credit card receivables pool.

 

Meanwhile, the affirmations affect four tranches of 2005 series notes totaling $1.2 billion and are based on those notes expected maturity being within 60 days and having already started accumulating principal.

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