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December 20, 2019  

TIAA Swears Off Jumbo-Mortgage Offerings

TIAA has shut down its jumbo-mortgage securitization program.

The exit took place gradually over about a year, as TIAA reduced its activities as a jumbo-loan originator and placed more emphasis on writing agency loans. It concluded with the November departure of executive vice president J.B. Long.

TIAA became a jumbo-mortgage lender with its 2017 purchase of EverBank, with Long moving over from his post as that institution’s president. He earlier led the capital-markets area at EverBank, which had issued $610.7 million of jumbo-loan securities across two deals, both in 2013.

TIAA carried on that program, with Long supervising it. The operation completed three jumbo-mortgage securitizations totaling $1 billion in 2018, including a $319.7 million transaction that October. But that deal would be its last.

Early this year, TIAA shifted its lending focus to agency loans. That move included a withdrawal from the retail-lending business, with the company closing some 70 origination offices it inherited from EverBank.

To fund its remaining fixed-rate jumbo mortgages, TIAA conducted a series of whole-loan sales amid favorable conditions in that market. It also kept some adjustable-rate jumbo accounts and shorter-term mortgage products on its balance sheet.

The adjustments apparently reflected a desire on TIAA’s part to better match its mortgage offerings to its client base, which is heavy on individuals in the academic and government fields. “TIAA has wide demographic ranges, a lot of retirees, and more of a mass-market audience. And the trend has been less jumbo and more conforming,” one source said.

In the meantime, Long’s role at TIAA changed to head of business strategy, an assignment some industry participants saw as a precursor to his exit a few months later. That said, TIAA hasn’t ruled out a return to the market in the future.

TIAA also issues collateralized loan obligations.

Despite TIAA’s absence, jumbo-mortgage securitization volume reached its highest level since the credit crisis this year, with issuers completing 70 deals totaling $24.9 billion, according to Asset-Backed Alert’s ABS Database.