Friday, June 25, 2010

Criteria for Lending Jumbo Mortgages Still Rigorous 


There is currently a ceiling of $417,000 in most areas of the country for mortgages to be covered by the Home Stability Plan introduced by the Obama Administration. The basic premise of this particular plan means that, rather than the various banks having responsibility for debts accrued in response to mortgage requirements; this has become the responsibility of Fannie Mae and Freddie Mac. Or, at least, those borrowers who have conforming mortgages find that their mortgages are covered by the Home Stability Plan. Any borrower whose mortgage comes under the aegis of jumbo loan mortgage finds that they fall through the Obama Administration’s safety net.

Conforming Mortgage Ceiling Raised

Fortunately, in most parts of the country this is only around 4% of house purchasers according to ‘Inside Mortgage Finance’ reports. The trouble is, for the more expensive areas of New York and California, this figure rises to 8% and 17% respectively even though the conforming mortgage ceiling has also been increased. The difference between conforming and the jumbo loan mortgage has become far more prominent as a result because, in some of the more expensive areas of the country, even to purchase a modest family home, costs far more than the ceiling allowable under the Home Stability Plan.

This has clearly touched a nerve in some quarters as the Chairman of the Federal Reserve has even intervened, suggesting that the $729,750 ceiling allowable in the most expensive parts of America should be raised to $1 million so that many more potential borrowers with mortgages jumbo loan applications can take advantage of their mortgage debt being protected by Freddie Mac and Fannie Mae. Whilst there is some sympathy for those people who do fall through this mortgage net with a jumbo loan mortgage, there are far more people to whom this would be anathema; Fannie Mae and Freddie Mac were originally set up to help the poorer sector to get onto the property market, not to assist those already on it who now find their finances will no longer support this lifestyle.

Buy-Down Mortgage

This sector, quite rightly in many senses, believe this more affluent group should downsize rather than attempt to take valuable funds from the less prosperous sector. The jury’s still out on that one. However, many borrowers currently with mortgages jumbo loans outstanding are now dipping into their retirement savings to attempt to reduce their jumbo loan mortgage to a more manageable figure that falls within the conforming mortgage levels so that they can call on the assistance of Fanny Mae and Freddie Mac for further assistance.

Mortgages Jumbo May Be Increasing

Inside Mortgage Finance, which has been tracking the movements of the mortgage market since 1990, report that the jumbo loan mortgage fells by 42% at the end of 2009? Nevertheless, ING Direct is still making jumbo loan mortgage offers to those lenders who fulfill their lending criteria. Despite this, jumbo loan mortgage is worth less than $11 billion at the present time, despite the interest rates on mortgages jumbo now being around 5.5%. Nevertheless, the lenders who traditionally lend on the jumbo loan mortgage market are beginning to get a bit more lenient with the hope that, by the end of the year, the mortgage jumbo loan being offered will be a bit easier to obtain for a larger proportion of the population.