Jumbo and super jumbo mortgage loans are riskier than other types of mortgage loans given the large amounts.  Lenders have more risk with larger loan amounts than smaller loans and they have less ability to sell the loans in the secondary market.  The lack of secondary market support means that most lenders may need to keep the loans on their balance sheet in their loan portfolios.  Mortgages between $650,000 and $2,000,000 have a limited secondary market investor pool amongst banks and real estate investment trusts (REITs). Loans over $2,000,000 usually require extensive work to find a lender or investor to portfolio the loan for the duration of its loan terms. Loans over $2 million usually require private mortgage bankers or wealth bankers from large financial institutions that specialize in these types of loans.

Risks for large jumbo loans are mitigated when the loans are put into a mortgage backed security or if the loan(s) are participated out to other lenders or investors.  Securitization of jumbo and super jumbo mortgages has not met with the same success as conventional mortgages.  If lenders can spread the risk through securitization or participations, it allows them to free up capital and liquidity to make other jumbo loans.

Mortgage market liquidity has remained stressed during the past few years as lenders and investors have avoided riskier mortgage products that don't have any kind of government guarantee associated with the loan.

The collateral for jumbo mortgage loans is predominantly luxury real estate properties.  These luxury properties are more difficult to sell in foreclosure based upon the amount of money required to purchase them and traditionally stay in a bank or lender's real estate owned (REO) portfolio longer than other assets.