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RSS FeedThe Real Truth about Jumbo Mortgages |
Posted at New Jersey Real Estate by Karl von Loewe
May. 12, 2008
Categorized in: Real Estate Market
In an article today in Realty Times Kenneth Harney wrote that jumbo loans are priced too high above conventional. Congress, led by Representative Barney Frank, is going to investigate. In fact, the issue is slightly different. The higher ceiling on conforming loans - $729,750 - is really not what it is purported to be. In reality, the effective conforming ceiling is still $417,000; anything over that carries an interest rate and fee "penalty." And of course, loans over $729,750 carry an even higher ticket.
That is the reason that the new conforming ceiling has not had the impact that was expected in California, for instance, where it was hoped that the high prices of California real estate could be handled more easily with more affordable large mortgages. It is clear that the mortgage companies are still trying to recoup losses from their wheeling and dealing of the past five years by penalizing qualified buyers. They seem unable or unwilling to differentiate between risky loans to bad actors and reasonable loans to legitimate buyers. In fact, many mortgage companies have hijacked the bus of buyers eager to take advantage of high inventories and good prices, and have driven it into the ditch.
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