The Jumbo-Mortgage Market Thaws – WSJ.com
The Jumbo-Mortgage Comeback
Some Areas Are Seeing the First Signs of a Resurgence in High-End Home Loans
By M.P. McQueen
Banks are starting to make “jumbo” mortgages again.
When the credit crisis hit more than two years ago, many banks cut back or stopped making loans for more-expensive homes. Now, smaller and regional lenders are issuing more new jumbo loans and doing more refinancings—as are some big banks that never stopped making them. If the trend continues, it could help bolster home sales in some wealthier areas.
In the second quarter of 2010, jumbo-mortgage lenders originated $18 billion in loans—a 20% increase from the first quarter. Jumbo lending still remains far below 2007 levels, according to Inside Mortgage Finance Publications Inc., an industry data provider.
J.P. Morgan Chase & Co.’s Chase Home Lending unit increased its jumbo-mortgage volume by 146.2% in the first six months of this year over the same period a year earlier, and Wells Fargo & Co. by 47.5%, according to Inside Mortgage Finance. PHH Corp. of Mount Laurel, N.J., a mortgage originator and servicer, issued 64.6% more jumbos in that period.
“Overall lending for mortgages is up, and jumbos are up more,” says Thomas A. Kelly, a Chase spokesman. “Part of it is that we have the capacity and we are making it available to our customers.” But, he adds, “we are still using very disciplined underwriting and we want to make sure that you have an ability to repay the loan.”
Jumbo mortgages are those that are too big to be bought by government-backed agencies such as Fannie Mae and Freddie Mac. The limits vary by region, though they generally are mortgages that exceed $417,000. In high-cost metro areas, including New York and San Francisco, jumbo loans are generally those that exceed $729,750. The limits can be even higher in Alaska and Hawaii.
This is some good news for the Real Estate industry. One of many factors that has been hobbling sales is the difficulty many borrowers find when trying to secure a jumbo loan.