Chase wholesale eliminates jumbo home loans

Chase wholesale eliminated jumbo home loans today (thanks for the tip S!) - citing the lack of a secondary market, poor loan performance and decreased volume.  The lift on the federal loan limit, declining property values and the elimination of stated income, stated asset loan products are all reasons that the jumbo market has dried up.  We should expect to see more of this.  Big, non-performing loans that suck up liquidity just aren’t a prudent business decision for lenders any longer.

While I’d normally beat the dead man walking drum I think this is pretty immaterial to most brokers as most folks, except for a very few that could actually provide documentation for a larger loan amount, weren’t able to qualify for these loans in the first place.

From Chase:

Friday, August 1, 2008

Today we are announcing the elimination of all Non-Agency/Jumbo Fixed and ARM (Amortizing and Interest Only) product offerings within our Wholesale Lending Business. We have made this decision based on a variety of reasons.

First, we have seen a dramatic reduction in Jumbo volume levels over the past six months. To a point, it has become a very small percentage of our overall business. Secondly, Capital Markets continue to exhibit no interest in this product, as it sees safer and more liquid products such as Fannie Mae, Freddie Mac and Ginnie Mae Mortgage-Backed Securities as better investments. Thirdly, our delinquency performance on these loans has been substantially worse than both our expectations and standards allow. Due to all of these factors, we feel it is in our best interest to suspend these products at this time.

It has been quite a tumultuous time in mortgage banking for the past 12 months. In fact, we are in the midst of the worst mortgage and real estate crisis in American history. Despite this, Chase continues to remain unwavering in its commitment to both mortgage lending, and specifically the Wholesale business.

We will closely monitor changes in this offering, including performance and salability in Capital Markets, calibrate the product set as appropriate and possibly re-introduce it in the future.

Thank you for your business and your continued loyalty to Chase.

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