Mega bank JPMorgan Chase issued its second private-label residential mortgage-backed securities deal of the year, with high geographic concentration as the primary risk posted within the deal.

The geographic concentration of the pool is high, with a significant exposure to assets located in California, representing 46.4%, as well as a number of other major metropolitan areas.

The platform J.P. Morgan Mortgage Trust, Series 2013-2 (JPM) reported a total balance of $442.5 million.

Kroll Ratings pre-rated the deal, giving the majority of the deal’s tranches AAA ratings.

Standard & Poor’s pre-rated the deal, giving the majority of the deal’s tranches AAA ratings.

Fitch Ratings pre-rated the deal, with the expected outlook slated as ‘stable’ with all the tranches also receiving AAA ratings.

The platform will contain 544 loans in the deal with all the loans in the pool classified as 30-year fixed mortgages.

JPMorgan mortgages will make up the majority of the loan transaction, or roughly 19.7%.

Other originators include Guaranteed Rate, Residential Pacific Mortgage, Cobalt Mortgage, PrimeLending and First Savings Mortgage Corp.

In addition, the weighted average borrower credit score is 775, well within the prime mortgage range. Also, the majority of loans in the pool — 63% — are refinancings with no cash out to the borrower.

A notable weakness in the deal compared to other RMBS transactions is the representation and warranties framework, Kroll noted.

“Although the seller will be making the loan level R&Ws with respect to the loans it purchased from unaffiliated third party sellers, no entity will be guaranteeing the cure obligations of Bank of Manhattan, N.A., Johnson Bank, and Dubuque Bank and Trust Company (collectively comprising approximately 7.4% of the loan pool,)” the credit rating agency explained.

However, a strength in the deal is the experienced servicers and master servicer. 

“JPMorgan is an experienced and capable mortgage servicer and will servicer 98% of the pool,” Kroll explained. 

They added, “Johnson Bank and Dubuque Bank and Trust Company will service the remaining 2% of the loan pool. Wells Fargo Bank has significant experience as a master servicer, having been in the business for over 15 years and currently providing master servicing on over $300 billion of loans.”

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