Jumbo Mortgage Delinquencies Rise to 9.6%

2010 February 8

Prime jumbo loan performance continued to weaken in January 2010 as serious delinquencies rose for the 32nd consecutive month, according to Fitch Ratings.

“The new year has brought no relief from declining jumbo loan performance,” said Managing Director Vincent Barberio. “The trend line for delinquencies indicates the 10% level could be reached as early as next month.”

Prime jumbo mortgages at least 60 days late backing securities reached 9.6% in January from 9.2% in December.

Prime jumbo loan delinquencies began to rise in the second quarter of 2007, but accelerated in 2009 and nearly tripled over the course of the year.

Five states with the highest volume of prime jumbo loans outstanding comprise approximately two-thirds of the loans. Prime jumbo RMBS 60+ days delinquencies for these states at January 2010 compared to December 2009, and their approximate share of the $381 billion market.

California: 11.3%, up from 10.8% (44% share of the market)
New York: 6.1%, up from 5.8% (7% share)
Florida: 16.6%, up from 16% (6% share)
Virginia: 5.6%, up from 5.4% (5% share)
New Jersey: 7.4%, up from 7.1% (4% share)

Jumbo home loans are defined as being above certain conforming limits set by mortgage companies Freddie Mac and Fannie Mae.

The conforming limit for single-family homes was $417,000 from 2006 to 2008 but was increased temporarily by federal lawmakers in early 2008 to $729,750 in certain high-cost areas.

Non-agency mortgage securities lack guarantees from Fannie Mae, Freddie Mac or federal agency Ginnie Mae.

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