JUMBO MORTGAGES ARE A BIGGER PIECE OF THE HOUSING PIE
The good news for homeowners here in the Southern San Joaquin Valley and especially on the Central Coast of California is home prices are going up. Home prices are getting near, and in some markets are exceeding, the peaks hit during the run-up to the Great Recession in 2008.
The not so good news is for homebuyers who are looking to move up to a bigger more expensive home. It means now more than ever buyers are in need of jumbo mortgages. As jumbo loans in the post recession market are made by the banks buyers are facing tighter financial regulations and significant hurdles to clear in order to qualify for their loan.
Mitchell Hartman, writing for Marketplace, stated that in the aftermath of the housing crisis, bank, not just big banks, also small banks and credit unions, like the jumbo loan market. Those loans have to be held on the banks books, so there’s no competition from the secondary market or mortgage securities market.
Guy Cecala, publisher of “Inside Mortgage Finance,” said banks make up all the rules as far as underwriting and they decide who gets a loan and who doesn’t. The loans are very appealing and profitable for the banks.
Jumbo are financially beneficial for affluent borrowers too, said Cecala. “Assuming you’ve got good credit, it’s easier and more cost-efficient to get a jumbo mortgage now than it was in the five years leading up to the 2008 financial crisis.”
The country’s biggest banks, including J.P. Morgan Chase, Bank of America, and Citigroup, have increased their share of jumbo loans in recent years, according to data compiled by Compliance-Tech, a fair lending software and consulting firm base in Virginia.
The negative effect, simply because the issue of access to credit is alive and well, it means minority families are many times left out of the jumbo loan market due to lower income jobs.
The share of minority jumbo-mortgage borrowers has declined from 6.8 percent in 2006 to 1.7 percent in 2014 according to Compliance Tech Managing director Maurice Jourdain-Earl.
“If there’s not as much capital available to make loans to the loan amount and type for minorities and people with lower assets need then there is a squeeze,” stated Earl. He said that pushes borrowers into government-backed loans tied to Fannie Mae, Freddie Mac and the Federal Housing Administration, which tend to be more costly for the homeowner.
If you have questions about jumbo loans or any housing loan, call a local mortgage lender in Visalia, Tulare or Porterville or the Central Coast. We can help you sort through the mortgage maze.
Country Club Mortgage
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