Politicians – including those in the White House – continue to jawbone about how the private sector needs to step up and create a whole new securitization market that some day will replace Fannie Mae and Freddie Mac. This effort – supposedly – starts with the safest non GSE product out there: jumbo loans where well-heeled borrowers put down (say) 10% and are so filthy rich that their chance of default is next to nil. As well all know the jumbo MBS market has been on fire the past two years with $100 billion in deals being successfully completed. Actually, that’s a lie. Over the past two years less than $1 billion of jumbo MBS has been sold and the prospects for a meaningful revival in 2012 look iffy at best. So, will FHA hiking its jumbo premiums by 25 basis points cause business to flood to all those new conduits that have been salivating at the prospects of a revival? Don’t bet on it. As one jumbo source told us: “It will not help the private market since jumbo loans with 3.5% down payments are DOA as far as private label securitization is concerned. The rating agency subordination level would be so high that it would make it uneconomic to securitize.” There you have it. Obama, Boehner back to you.