HOME LOAN MORTGAGES: The Jumbo Question

We have been discussing, in the past couple of postings, the increased opportunities available today, for home owners and those in the market to buy a home, to get the needed financing they seek.

These opportunities emanate from Washington's continued efforts to free up credit and make it possible for home owners in jeopardy of loosing their homes to refinance, restructure or modify, in some manner, the mortgages they now have. On a parallel track rides the opportunity for first time home buyers to get into their first home, taking advantage of Washington's initiatives and credits.

For the most part, however, only conventional loans are available, as the funding of these mortgages will be backed up by Fannie Mae and Freddie Mac. Those whose loans are larger than $625,500 cannot participate, leaving tens of thousands of Americans out in the cold, as mortgages of $625,501 plus are beyond the legal ceiling of both Fannie Mae and Freddie Mac. That limit was upped in 2008 ,only temporarily to $729,750.

This development has relieved the stress in many households across the country. It appears, according to a report in the Los Angeles Times by Kenneth R. Hamey, of 03/22/2009 "new money is about to flow into an area of the real estate market that has been hard-squeezed by the credit crisis..." The report informs that the country's largest mortgage lender, Bank of America, "...is rolling out large program to finance loans between $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5% range."

This will be done through the Bank's retail network, it acquired last year, Countrywide Home Loans, which the report goes on to inform, is soon to become Bank of America Home Loans. It is reported that other lenders are seriously considering following in the footsteps of B of A, providing portfolio loans to buyers and homeowners in need of larger-than-Fannie-Freddie-FHA Loans.

What the guidelines for qualification in these Jumbo Loan programs will be, is yet to be ascertained. How much down payment will be required, what are the requirements for reserves, maximum loan amount,FICO, DTI etc., etc.

These variables notwithstanding, the supply of Jumbo financing entering the marketplace can only be viewed as a positive.