This Day On The Street
Continue to site right-arrow
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
Stocks Under $10 with 50-100% upside potential - 14 days FREE!

Banks to Profit Off Jumbos: Moody's

Stocks in this article: MCO BAC C JPM STI WFC

NEW YORK ( TheStreet) -- Several banks are likely to profit from funding jumbo mortgage loans as the government sponsored enterprises (GSEs) start to retreat from the marketplace, according to Moody's (MCO) report.

The largest jumbo loan producers are Wells Fargo (WFC), with $14.45 billion in jumbo loans, Bank of America (BAC) Home Loans with $12.43 billion in jumbo loans, JPMorgan Chase (JPM) with $10.2 billion, PHH Mortgage (PHH) with $8.52 billion, ING Bank (ING) with $6.9 billion and Citigroup (C) with $6.70 billion. SunTrust Mortgage (STI), US Bank Home Mortgage (USB), Astoria Federal Savings (AF) and Hudson City (HCBK) were also ranked as large jumbo loan lenders on Moody's list likely to make a profit.

"Banks with room on their balance sheets to hold higher balance loans in portfolio will pick up market share from loan originators that depend on selling the loans they originate to the government agencies," Moody's analyst Thuy Nguyen and senior vice president Brian Harris.

Banks originated $87 billion in jumbo loans in 2010, while Fannie Mae (FNM), Freddie Mac (FRE) and Federal Housing Administrationbought $93 billion in jumbo loan mortgages. In September the GSEs conforming loan limits will decline, making it easier for banks to enter the market and profit off of the mortgages.

"We estimate banks will have to fund only an additional $28 billion of jumbo loan a volume after the GSE and FHA's conforming loan limits decline," the analysts said in the report. "The allocation of $28 billion in additional jumbo mortgage volume means a 32 percent increase in each bank's jumbo mortgage portfolio."

Banks won't be the only ones looking to enter the jumbo loan market more aggressively. Private equity funds, REITs and hedge funds are also looking to yield more returns from the jumbo mortgage sector.

"We look forward to the potential roll-back at the end of September 2011 of the temporary increase in the conforming loan limits applicable to Fannie Mae and Freddie Mac, which would increase the share of the mortgage market for the private sector and reduce future risk to taxpayers, " said Martin Hughes, president of California-based REIT Redwood Trust said to The Street in a previous article. --Written by Maria Woehr in New York.

1 of 2

Select the service that is right for you!

Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!


DOW 18,053.71 +23.50 0.13%
S&P 500 2,088.77 +6.89 0.33%
NASDAQ 4,806.8590 +33.3870 0.70%

Brokerage Partners

Rates from

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs