Jumbo Mortgage Defaults Soar

Jumbo mortgages are now going south at an alarming rate, reports the Wall Street Journal, as affluent Americans face mounting layoffs and see their stock portfolios shrivel. Nearly 7% of prime jumbo loans—which average $750,000—were at least 90 days delinquent at the end of 2008, up from 2.6% a year earlier. That's three times the default rate of non-jumbo prime loans.

“There is more pain to come,” says an analyst, as banks and investors start feeling the fallout. Particularly hard hit will be JPMorgan, which loaded up on jumbo mortgages in 2007 and held on to them last year. "We were wrong," says CEO Jamie Dimon. "We obviously wish we hadn't done it."
(More financial crisis stories.)