Jumbo mortgages are those with an initial principal amount of over $417,000 (in most areas of the U.S. or over $729,750 in certain specified areas), a limit set by Fannie Mae and Freddie Mac.
Fitch Ratings, a credit rating agency, says the performance of prime jumbo loan performance in the residential mortgage-backed securities (RMBS) category dropped again in January as serious delinquencies (60+ days past due) rose for the 32nd consecutive month and edged closer to 10%.
Prime jumbo loan delinquencies have been rising since the second quarter of 2007. In 2009, the delinquency rate nearly tripled during the year. The serious delinquencies rose to 9.6% in January from 9.2% in December.
“The new year has brought no relief from declining jumbo loan performance,” said Fitch managing director Vincent Barberio. “The trend line for delinquencies indicates the 10% level could be reached as early as next month.”
California, which has a 44% share of the total jumbo market, saw the delinquency rate rising to 11.3% in January from 10.8% in December.
Delinquency rates rose in 4 other states – New York, Florida, Virginia, and New Jersey -- which along with California constitute the top 5 states in market share.
The jumbo market in the country is valued at $376 billion and dropping.
Grant Bailey, a senior director for the RMBS Group at Fitch, said: “In the 2005, 2006, 2007 vintages, close to 50% of borrowers are underwater. That keeps a negative pressure on borrowers and, therefore, we keep a negative outlook on delinquencies.”
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