(Originally published September 26, 2009.)
The Jumbo Mortgage Market is facing significant challenges. In this prolonged financial crisis, many banks are reluctant to lend in the higher-end of the housing market. And, under the Obama Administration, federal programs designed to help struggling homeowners, do not include homes worth more than $730,000.
Mortgage loans fall into three categories:
- Loans up to $417,000 are considered “conforming,” and most lenders re-sell these loans in bulk to Fannie Mae and Freddie Mac.
- Loans between $417,000 and $729,750 are potentially considered “conforming jumbo.” However, qualifying varies by location. Higher priced neighborhoods often qualify, while lower priced areas might not.
- Loans above $729,750 are considered “super-jumbo.” A lender must retain, or portfolio these loans due to the lack of a secondary market.
Most retail banks have discontinued jumbo lending due to the lack of a secondary market. There are no investors to sell these loans to and these lenders have no desire to portfolio jumbo loans. The result is that homes in high-end neighborhoods are not moving as quickly as lower priced homes, due to the lack of available financing.
“A lack of jumbo loans for top-priced homes is putting downward price pressure on the general US housing market,” said Lawrence Yun, chief economist with the National Association of Realtors. “We need to have a market recovery in all segments. If the high-end housing market weakens, those in the middle will have to reduce prices.” (USA Today 7/15/09)
At Mortgage Wealth Advisors, Inc., we are doing our part to stimulate the higher end of the housing market. Loan amounts of up to three million are still available for qualified borrowers. A qualified mortgage planner can create a financing package that suits your goals, while ensuring the funds will be there when you get to the closing!
Since 1992, Warren Goldberg has helped thousands of clients own their homes, refinance their mortgages, restructure their debts, and invest in real estate. Warren is known for his wide knowledge of mortgage products and wealth-creation strategies.