Jumbo Mortgages Easier to Come By, Thetruthaboutmortgage.com


Jumbo mortgages, which seemed to go the way of the buffalo once the mortgage crisis set in, are starting to make a comeback, per data parsed by the Wall Street Journal.
The publication said jumbo mortgage lenders originated $18 billion during the second quarter, up roughly 20 percent from the second quarter, using data from Inside Mortgage Finance.
That might explain all those recent OneWest Bank (formerly Indymac) billboards touting “jumbo loans without the mumbo jumbo.”
Chase Home Lending increased its jumbo loan lending by 146.2 percent in the first half of 2010, compared to last year.
Wells Fargo increased its jumbo fundings by 47.5 percent, and PHH Corp. saw jumbo loan origination volume soar 64.6 percent during the same period.
Of course, jumbo lending remains far below levels seen pre-boom and even early-crisis.
Jumbo mortgages accounted for just five percent of total mortgage originations in 2009 and so far in 2010, down from about 20 percent during 2004-2007.
Historically, jumbo loans capture about 18 percent of the market, according to Inside Mortgage Finance CEO Guy Cecala.
Jumbo loans are those that exceed the conforming loan limit, which is currently set at $417,000, though it’s temporarily as high as $729,750, thanks to fairly recent legislation changes that created so-called jumbo-conforming mortgages.
If you’re in the market for a jumbo loan, understand that underwriting guideline are still very tight, meaning full documentation is typically required, along with a hefty down payment.

Conforming Jumbo Loan Limits Extended, Thetruthaboutmortgage.com


The conforming jumbo loan limits, which allow homeowners in certain areas of the country to get government-backed loans of up to $729,750, have been extended for another year, according to the Mortgage Bankers Association.

Last night, H.R. 3081 passed the Senate and House – it contains provisions that extend the existing loan limits for Fannie Mae, Freddie Mac and the Federal Housing Administration (including FHA loans and reverse mortgage products, or HECMs) through September 30, 2011.

Additionally, it provides $20 billion in loan commitment authority for FHA’s General and Special Risk Insurance Fund.

“Extending the existing limits is essential to helping borrowers continue to have access to affordable long-term, fixed-rate mortgage credit in today’s struggling economy,” said Robert E. Story, Jr., Chairman of the Mortgage Bankers Association, in a release.

“The current limits have been a key component of keeping the mortgage market functioning, helping keep mortgage interest rates low for consumers who want to purchase a home or refinance an existing mortgage.

Without such an extension, larger loans would have fall into the jumbo loan category, resulting in interest rates a percentage point or more higher than conforming loans.

The traditional conforming loan limit is currently set at $417,000 for one-unit residential mortgages.

Conforming jumbo loan amounts ($417,001 to $729,750) price at a slight premium to conforming loan amounts, but well below jumbo loans amounts.

Banks Say Big Benefit to those Refinancing a Jumbo Conforming “High Balance” Mortgage, by Rosemary Rugnetta, Freerateupdate.com


(FreeRateUpdate.com) – Prior to the financial crisis that occurred several years ago, any mortgage above the Fannie Mae and Freddie Mac conforming loan limit was considered a non-conforming jumbo loan. With the Housing and Economic Recovery Act of 2008, the conforming loan limit was raised to $729,750 or 125% of the median home value within a metropolitan area, whichever is less. This rule has been extended through the end of 2010. Due to this change in conforming loan limit, banks are saying that there is a big benefit to those refinancing a jumbo conforming “high balance” mortgage at today’s rates. Many of these homeowners are seeing the potential benefits and are refinancing their non-conforming high interest jumbo loans to lower conforming interest rates.

In the past, many homeowners purchased homes that required a high balance jumbo mortgage which carried higher interest rates for the term of the loan. In order to avoid the higher interest rates of jumbo loans, many homeowners chose to take on 2 loans. Today, numerous borrowers are able to refinance to a conventional conforming jumbo loan depending on the area in which they live. These borrowers must still qualify under the current guidelines. Conforming conventional loans are those that are underwritten by banks and follow Fannie Mae and Freddie Mac guidelines and do not exceed the loan limits. Due to the increase of loan limits, over 6% of homeowners fall into this category in 197 designated high cost areas in the United States. Even though today’s underwriting standards are stricter, these jumbo conforming conventional loans are still easier to obtain than non-conforming jumbo loans which are considered riskier for a lender.

A top national branch manager of Homes Savings of America has stated that they are having a lot of success with the high balance jumbo conforming loan which has turned out to be a tremendous benefit to borrowers in this category. Many of these homeowners are carrying jumbo mortgages with interest rates in the mid to high 6’s. Today’s jumbo conforming 30 year fixed-rate of 4.375% is available to well-qualified homeowners who pay the standard .07 to 1 point origination fee. If these same borrowers had to refinance to a true jumbo loan of the past, they would be doing so at fixed rates in the low 5’s or about a full percentage point higher than conforming rates. Even those who originally took on 2 loans to avoid jumbo mortgage rates would benefit from refinancing both loans to today’s jumbo conforming fixed rate loan.

As banks continue to see their refinance business increase with homeowners who were originally locked into true jumbo loans, the deadline is drawing near unless it is extended during this last quarter of 2010. The savings benefit to those refinancing to a jumbo conforming high balance mortgage can have a double effect. These refinances result in lower monthly mortgage payments for homeowners and aid the economic recovery by putting more cash into the hands of consumers.