More Jumbo Money!
Category : Laguna Beach Real Estate
I am seeing more lenders offering Jumbo loans – above the maximum Fannie Mae/Freddie Mac limit of $729,750. Some lenders will go to $2 Million and some even offer loans to $4 Million and higher.
This is great news for the higher priced markets that have been left out of the government’s stimulus packages that increased conforming and FHA loans from $417,000 to $729,750.
The reason is that some of the bigger investment banking firms are allocating some money to the securitization of jumbo loans. Some of the names I’ve heard mentioned are Chimera Investment Corp., The Carlyle Group, PIMCO, and Goldman Sachs. Most of the firms working on a jumbo Mortgage-Backed Securities (MBS’s) hope to originate recently funded loans that were underwritten to today’s stricter guidelines. Until now, the few lenders willing to make jumbo loans had to be able to keep these loans on their own balance sheet. They also had to increase their reserves in case of future default. Therefore, most banks just couldn’t afford to offer jumbo loans.
The securitization of Jumbo’s still has a long way to go but the signs are very encouraging. Just a few months ago I was reading articles saying it could be years before there were buyers for Jumbo MBS’s.
This is all good news for those of us in high-priced markets.