BlackRock Inc. hopes to buy upward of $250 million of jumbo loans each quarter with an eye toward securitizing the product.
"We've committed $1 billion in capital to the program, and we have warehouse lines in place," said Randy Robertson, a BlackRock managing director who is co-head of its securitized asset team.
The money management company likely will not fund any product with loan-to-value ratios too far above 80%.
Robertson said the company — founded by Larry Fink, a co-inventor of the mortgage-backed security — is open to buying jumbo loans from lenders of all different charters and sizes. "We're looking for high-quality assets that come from management teams that have tenured job status," he said.
He added that there is investor demand to support more jumbo deals. In April, Redwood Trust Inc., a publicly traded real estate investment trust based in Mill Valley, Calif., issued a $222 million jumbo mortgage-backed security, the first such securitization in 18 months.
But since that bond came to market, no other nonconforming deals have been structured.
Redwood hopes to issue another security early in the first quarter and is actively buying loans from correspondent mortgage bankers. (One of BlackRock's largest shareholders, Bank of America Corp. of Charlotte, was another large player in jumbo mortgages, but last week Bank of America sold its 34% stake in the money management company.)
Several companies are rumored to be working on jumbo conduits, but few have publicized the fact.
Robertson joined BlackRock of New York in 2009 after having spent 10 years with Wachovia's capital markets unit, most recently as managing director in charge of the residential mortgage and consumer group.
He also worked for The Money Store, a home equity lender later bought by First Union, a predecessor of Wachovia (which itself is now a part of Wells Fargo & Co.).