JPM RMBS deal prone to payment shock, say market participants

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By Ryan Bolger
30 Sep 2014

JP Morgan Mortgage Trust’s planned $483.56m jumbo RMBS issue is backed entirely by adjustable rate mortgages. The deal has raised concerns over the potential for payment shock to cause defaults in the loans.

The notes, JPMMT 2014-IVR3, are backed by 551 adjustable-rate mortgages with teaser periods of five, seven and 10 years, according to a Kroll Bond Ratings Agency presale. Approximately 23.8% of the loans carry a 10-year interest only period.

Concerns over performance of the notes arise from uncertainty over interest ...

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