Syndicated real estate columnist Kenneth R. Harney reported in a recent column that jumbo mortgage money is flowing back into the home loan market. This is great news for agents and their qualified luxury home prospects.
Jumbo loans are generally mortgages exceeding Fannie Mae and Freddie Mac's statutory high-cost market purchase limit. At the beginning of this year, the ceiling was $625,500, compared to $417,000 a year earlier. Congress has raised the upper limit in high-cost areas for Fannie, Freddie and the FHA to $729,750, a figure extended by Congress through the end of 2009.
According to Harney, new money is starting to flow into mortgage loans which are too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration. Major banks are starting to fund programs offering "jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper five percent range," said Harney.
Tim Kruger, a Westlake Village (CA) based Private Mortgage Banking officer for Wells Fargo, told a recent Institute training class in Beverly Hills that Wells Fargo is once again offering jumbo loans. Bank of America reports they will offer jumbo loans through their retail network and also through their Countrywide Home Loans subsidiary. Amsterdam-based ING Group has also begun offering jumbos. Rather than spinning these loans off to Wall Street, the lenders are expected to hold them in their own portfolios. Expect stringent qualifying requirements and minimum required down payments from 20% to 30%
