Where Did The Jumbo Loans Go?

You've likely read the stories of large lenders and investment giants writing down their mortgage portfolios by the billions, as the media places the blame on subprime mortgages. What the public needs to know as that nearly 80% of all subprime mortgages are actually performing, losses can also be attributed to the number of cities suffering from large depreciation, impacting luxury homes in various markets to the tune of well over $100,o00. So as Fannie and Freddie shoulder the losses on Conventional Conforming loans, those who purchased mortgage-backed securities over the last several years, have no safety net and are forced to take the losses themselves.

Almost overnight, the appetite for non-conforming loans, even those for borrowers will exceptional credit profiles, has disappeared. Fixed rate Jumbo mortgages have climbed well over 7%, moving the spread between and Conventional and Non-Conventional loan over .75% at a minimum, and in many cases even more. So are there just no options? This is not the case, although criteria for approval has certainly changed, these loans are available and mortgage brokers have the advantage as qualification standards, as well as rates, vary based on the investor.

Adjustable rate mortgages are still attractive, with fixed periods available from five to seven years, and rates as low as 5.75% in recent weeks. Down payment is critial, as well as liquid reserves (cash and marketable securites, not the wine collection), but the options exist, only time will tell if we will see the secondary market realize that low risk borrowers deserve more options. For now, it will be up to portfoio lenders to set the standards by which borrowers must meet.