Canadian lender sets sights on American originator business

by Justin da Rosa04 Nov 2015
It’s a lucrative market for originators and it’s one being targeted by an influential big bank.

Royal Bank of Canada – the country’s largest bank, based on profits – is planning on using its acquisition of City National Corp. to grow its influence in the American jumbo mortgage market.
The jumbo mortgage segment is a lucrative one for brokers, with many focusing on the high-net worth clients who are often the purchasers of properties that require mortgages in excess of $417,000 – the threshold for jumbo mortgages in most markets.

And it’s one that industry players expect to continue to grow in certain real estate hot-spots.

“There really is no alternative to jumbo mortgages in a rising home price market; jumbos are really the only option in Manhattan,” Shaul Betesh, branch manager and senior VP of mortgage lending for The Manhattan Mortgage Company, told Mortgage Professional America. “Some markets – such as Brooklyn -- are seeing exponential growth in the jumbo market.

As it stands, City National only held $5.7 billion in residential mortgages at the end of Q3, but with such a large institution now dedicating resources to the bank, its influence in the mortgage industry will surely grow.

“One of the areas we are very interested in is using jumbo mortgages more aggressively,” RBC Chief Executive Dave McKay told the Wall Street Journal. “It’s big part of the strategy that City National hasn’t really levered yet that other competitor banks have.”

Despite the fact that smaller players will now have a larger competitor to tangle with, the acquisition – and dedication to the jumbo market – by RBC speaks to the continuing improvement of the real estate and mortgage markets in the United States.


  • by Jeff in So Cal | 11/4/2015 2:15:22 PM

    Last time they tried this they took way too long to underwrite and did not understand individual markets like Los Angeles. They cut value on a custom property by $250k in Hollywood Hills 5 minutes from Sunset and La Cienega calling it rural. Imagine trying to buy a 2000 sq ft home on a 8000 sq ft lot for less than $500K in the Hollywood Hills.

  • by John in Ohio | 11/4/2015 4:58:34 PM

    I hope they can explain the disparate impact they are creating for fair lending by focusing on strictly higher price areas and Jumbo mortgages. Several other banks weren't very successful with that and ended up settling with CFPB for millions in fines...


Should CFPB have more supervision over credit agencies?