Higher loan limits, set by the federal government as part of an economic stimulus package early this year, were supposed to make jumbo loans more affordable in expensive housing markets. Jumbo-conforming loans range in size from $417,000 to nearly $730,000 and are especially important in expensive housing markets. – Agency jumbo-conforming loans, which meet, or "conform to," Fannie Mae or Freddie Mac guidelines and can be sold to those secondary market corporations, or "agencies"
- FHA jumbo-conforming loans, which meet guidelines set by the Federal Housing Administration (FHA), a U.S. Department of Housing and Urban Development agency that guarantees home loans
- Bank jumbo loans, which needn’t conform to either agency or FHA guidelines
When the new jumbo-conforming loans were announced, there was an expectation that the rates would be similar to those for conforming loans. But for the first six weeks of the jumbo-conforming loans’ existence, they were priced closer to regular jumbo loans. Finally, in the second week of May, Fannie Mae CEO Daniel Mudd announced that the company would price conforming and jumbo-conforming loans identically. Rates dropped abruptly on jumbo-conforming mortgages. The difference to me was not doing loans and then doing loans."
The typical jumbo-conforming borrower wants to refinance out of an adjustable-rate mortgage "and they’re seeking the safety of a fixed (mortgage)," Lepre says. They pay for that safety: A lot of these borrowers will pay a higher rate on their fixed-rate jumbo-conforming loan than they were paying on the previous jumbo ARM.
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