Jumbo is Dead
A Jumbo mortgage is any loan with a balance more than $729,750, which puts it beyond Fannie Mae, Freddie Mac, and Ginnie Mae funding guidelines. Jumbo loans are for big houses owned by people who are well-to-do, think they are well-to-do, want you to think they are well-to-do, or were once well-to-do. And jumbo loans are close to dead.
Of the big U.S. mortgage lenders only ING Direct is really pushing its jumbo mortgages. Most of the big banks still list jumbos on their product list (Chase doesn’t, however, nor do several other national lenders) but hardly any of them are actually funding jumbos. They almost don’t exist anymore.
Which is very interesting since a heck of a lot of jumbo-sized houses DO exist. The the owners of those houses are worried. What happens if their mortgages reset making the house no longer affordable? What if they need to refinance and can’t? And here’s the really big one: how can these people afford to sell their houses if no buyers can get jumbo mortgages to own them? The houses (and their owners) are effectively frozen.
Lucky me, I’m planning to move nowhere, my 5/1 jumbo ARM from WAMU is about to reset, but drops in the LIBOR index and the stronger dollar are actually causing my ARM rate to go DOWN.
That’s for now. What happens if LIBOR goes the other direction? Deleveraging. If the only loan I can get is for $729,750 then I guess that’s the new value of my old house.
Dammit.
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