White shoe Wall Street firms Goldman Sachs and JPMorgan recently launched deals securitizing mostly prime mortgages that provide investors with fixed-rate loans to financially strong borrowers. Unlike some recent RMBS deals, both exclude riskier interest-only loans and those supporting investment properties.
The $550 million JPMorgan Mortgage Trust 2024-12 transaction, expected to close December 20, is 95.3% traditional, nonagency, prime jumbo-mortgage loans, with the remaining 4.7% eligible to be purchased by the government-sponsored enterprises (GSEs), according to Morningstar DBRS.
Similarly, the $309 million GS Mortgage-Backed Securities Trust 2024-PJ11 deal, expected to close December 27, securitizes 256 fixed-rate loans to well-qualified borrowers, Morningstar DBRS said in a separate report.
Each deal comprises numerous classes of primarily investment-grade notes, with noninvestment-grade notes making up 1.15% of the JPMorgan deal, and 0.55% of the Goldman offering.
Neither transaction holds interest-only loans or loans for investment properties, according to Morningstar DBRS, and the loans in both transactions were originated in accordance with the Consumer Financial Protection Board's Qualified Mortgage rule
That is contrary to several RMBS deals issued recently that held one or more of those risky attributes, including a $380 million offering from MFA Financial and a $546 million deal by FirstKey Mortgage
Goldman Sachs underwrote its own transaction that pooled loans originated by several lenders including United Wholesale Mortgage, PennyMac Loan Services and CMG Mortgage.
JPMorgan's deal was underwritten by JPMorgan Securities and a list of regional brokerages including AmeriVet Securities, Drexel Hamilton, Piper Sandler, and Robert W. Baird.
The ratings agency noted that the deals share the challenge of their servicers' financial capabilities, saying that while operationally sound, they could face financial difficulties servicing future advanced obligations. In the Goldman deal, the rating agency also noted weaknesses in its representations and warranties framework, such materiality factors and knowledge qualifiers.
