With expectations rising that the White House and Congress will allow the GSE loan limit fall to $625,500 next fall, more investment banking firms — and even commercial banks — are exploring the idea of creating jumbo conduits.
According to bankers and advisors who play in the mortgage space, firms talking about launching Jumbo conduits include Barclays Capital, Credit Suisse, and even Bank of America.
To date, these firms have declined to discuss the issue. As for BofA, it's unclear if the bank's mortgage division is exploring a conduit, or its capital markets group.
One mortgage source at BofA told National Mortgage News that currently the bank "has no appetite to hold too many Jumbos" on its books. He said he is not authorized to talk about the bank's mortgage plans and asked that his name not be published.
He fears that if the Jumbo GSE limit falls, his production will suffer.
Meanwhile, although many firms are exploring conduits, not one Jmbo deal has come to market since Redwood Trust issued a $238 million bond last spring. The publicly traded REIT hopes to issue a second Jumbo bond by the end of March and is already gathering product.
The GSE "Jumbo" loan limit has a ceiling of $729,750 and few Republicans in Congress favor extending it beyond September.
