JPMorgan, Citigroup Expand in Jumbo Lending

New York-based banks, JPMorgan (JPM) and Citigroup (C) are expanding in jumbo mortgages, signaling renewed interest in a market decimated since 2007. Separately here, a growing number of smaller banks and credit unions are also venturing back into the market.

Bloomberg: JPMorgan resumed buying new jumbo loans made by other lenders this month, after halting purchases in March, spokesman Tom Kelly said. … Citigroup is again offering the loans through independent mortgage brokers, spokesman Mark Rodgers said.

New jumbo lending…totaled $348 billion in 2007, before dropping to $98 billion last year as mortgage companies tightened standards, according to newsletter Inside Mortgage Finance. Jumbo lending slowed in the fourth quarter to $11 billion, or 4 percent of the mortgage market, the lowest quarterly amount since Inside Mortgage Finance started tracking that data in 1990.

Bank of America Corp. was the largest jumbo lender in the first quarter, with almost $9 billion in new loans, followed by Citigroup…JPMorgan ranked sixth.

More than 7 percent of prime-jumbo loans backing securities sold in 2006 and 2007 were at least 90 days late, Standard & Poor’s said yesterday.

One thing worth noting is that because the lending standards have been raised, many borrowers are still being turned down based on their inability to meet the strict qualifying criteria lenders have imposed on jumbo loans that includes:  down payments of 20% or more, credit scores of 700+, and enough savings to make mortgage payments for at least six months.


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