Jumbo Lending Still Available

Here at Lake Norman we have continued to see little to no showings and sales in the upper price ranges.  I found this article particularly helpful.  The loans are available.

$1,350,000 on the Shores of Lake Norman

$1,350,000 on the Shores of Lake Norman

Bank of America has cut interest rates on jumbo mortgage loans in the hopes of expanding its share of what the bank sees as an underserved market for loans too big for purchase or guarantee by Fannie Mae and Freddie Mac.

Not everybody will qualify for the 30-year, fixed-rate loans of up to $3 million that Bank of America has been offering at reduced rates since January, with interest rates currently in the high 5 percent range.

In order to qualify, borrowers will need strong credit (a 720 FICO score or above), down payments of 20 percent or more, documented income, full appraisals, and assets sufficient to cover six months of payments, said Bank of America product management executive Vijay Lala.

But Bank of America thinks its fixed-rate jumbo loans will prove to be attractive to qualifying borrowers, because many competitors will be hard-pressed to match its rates.

Jumbo loans have become more expensive and harder to come by since September 2007, when rising delinquencies gave investors who fund most home loans through the purchases of mortgage-backed securities cold feet about “private label” securities that don’t carry the backing of Fannie and Freddie.

Unlike some lenders who must securitize and sell the loans they originate, Lala said Bank of America has plenty of room on its balance sheet to fund jumbo loans and hold them for investment, and is “putting the pedal down on our pricing and going after this market.”

Lala said Bank of America and Countrywide Financial Corp., which it acquired last year, funded $16.12 billion in jumbo loans in 2008. Although jumbo loan funding dropped to just $2.4 billion in the fourth quarter, Bank of America is already seeing “very nice volume” since introducing its more aggressive pricing.

Bank of America will only offer the loans directly to consumers — and not through independent mortgage brokers — through retail bank branches and Countrywide Home Loans (which will be re-branded Bank of America Home Loans on April 22). Lala said he expects many borrowers will be existing Bank of America customers.

The loans are aimed not only at homebuyers, but homeowners with adjustable-rate mortgage (ARM) jumbo loans who are looking to refinance at better rates. For both purchases and refinancings, the loan-to-value ratio can’t exceed 80 percent on loans up to $1.5 million, or 70 percent on loans up to $3 million.

While some other national lenders, such as ING Direct, offer jumbo loans, in many markets small community banks that lend against local deposits have been the main players, said Dan Green, a Cincinnati-based loan officer for Mobium Mortgage Group Inc.

Many of those lenders are able to aggressively price jumbo ARM loans but may not offer fixed-rate jumbo loans at all, Green said, because they are more sensitive than Bank America to changes in interest rates that affect lenders’ own funding costs.

Although niche lenders are offering rates on 3-year or 5-year jumbo ARM loans of around 4.5 percent that carry significantly lower monthly payments at the outset, some borrowers may prefer the certainty provided by the higher rate offered by Bank of America on its 30-year fixed-rate loans, Green said.

“It’s nice there’s an outlet, and I suspect there will be competition soon,” Green said. He said Bank of America’s underwriting standards “aren’t the loosest or the strictest — they’re right down the middle of the road.”

After the secondary market for jumbo loans seized up in 2007, lawmakers raised the loan limits for Fannie, Freddie and FHA loan guarantee programs. For most of 2008, the $417,000 conforming loan limit was allowed to stretch to 125 percent of the median home price in high-cost markets, with a ceiling of $729,750.

Assuming that the jumbo loan market would be on its way to a recovery by now, Congress mandated the limits would step back down to 115 percent of median home price on Jan. 1, with a ceiling of $625,500.

The $787 billion economic stimulus bill passed by Congress in February, the American Recovery and Reinvestment Act, restored the limits in place during most of 2008 for the remainder of this year.

 

By Matt Carter, Friday, March 20, 2009.

Inman News

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About Michelle Nantz

There are many qualities and skills that go into being an excellent real estate professional: integrity, in-depth community and market knowledge, marketing savvy, effective negotiation skills, and a high-quality professional network ~ all of which are hallmarks of Michelle Nantz. In 2003, Michelle began her career in real estate, after a successful career in restaurant and hotel management with her last position as Regional Director of Operations running 56 hotels throughout two states. She owes her success in real estate and management to her expertise in people skills, managing, negotiating, and follow-up. However, it is Michelle’s dedication to quality service that she ultimately credits her success. Michelle shared, “In my experience as a Lake Norman real estate professional, I’ve found that providing the very best service is essentially about putting my clients first. This means keeping myself accessible, being a good listener as well as a good communicator, and responding quickly to their needs.” This “client first” philosophy combined with continual personal improvement and keeping up-to-date with the latest technologies is a cornerstone of both Michelle’s and Lake Norman Realty’s business philosophy. In addition to Michelle’s extensive real estate education and her experience in the local market, she is also an Accredited Staging Professional®, which brings additional value to marketing her clients’ homes. Michelle and her family have made the Lake Norman area their home for over 10 years. In her rare leisure moments, you’ll find Michelle with her three children and husband, or unwinding with gardening or reading. “I live and work in this community and only have the best interests of our community and its members in mind,” says Michelle. Her community activities include participation in Denver Days, Relay for Life and support for Christian Ministries and area schools.
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One Response to Jumbo Lending Still Available

  1. JB williams says:

    Very timely and informative on jumbo mortgages. Thanks for sharing this.

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