Market Conditions in Boulder>Question Details

BoulderSuZ, Real Estate Pro in Longmont, CO

Fannie Mae and Freddie Mac are getting out of the jumbo loan business this fall ...

Asked by BoulderSuZ, Longmont, CO Thu May 26, 2011

Could area markets see a rise in sales at the upper end as buyers see lower priced money about to disappear?

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I don't know BoulderSuz:

The article below seems to imply that the banks and others are more than ready to jump in. The author asks, "Will this lead U.S. to another housing bubble?"

http://www.zacks.com/stock/news/53892/Who+Gains+from+Jumbo+M…

And Christopher Westfall at The Street writes, "But some of the largest investment firms on Wall Street are betting on a profitable, private jumbo loan market and have set up vehicles to fund them."

http://www.thestreet.com/story/11115175/1/wall-street-ready-…

But private investors may want larger returns soooo........


Kind regards,
Ron Rovtar
Prudential Real Estate of the Rockies
Days: 303.981.1617
Evenings: 303.473.1926
ron@rovtar.com
http://www.rovtar.com
0 votes Thank Flag Link Fri May 27, 2011
Lenders today are very aggressive in jumbo loans. Fannie and Freddie never did these! There are a few markets with limits above $417k but for most part jumbo loans have always been non conforming. I am seeing very aggressive rates and products out there, with higher loan to values becoming more prevalent everyday!
0 votes Thank Flag Link Tue Aug 13, 2013
Hello Ron and Gregorio,
Excellent, excellent comments.

What I see and hear in Longmont's 80504 is prices above half million have been hit hard. My theory is first there was not a lot of loan availability and now we're hearing costs are going up for money. We know that will exclude some buyers, so ultimately the pool of buyers ends up smaller.

Jumbo loans may be more attractive to investors because of the higher rate. And you're right Ron, that might translate to too many investors taking on too much risk. Then again, we might be seeing bubbles everywhere. I'm glad there are people like Gregorio who give the subject scrutiny and can put it into perspective. And note, California's home prices are much higher. There should be availability from GSEs for those markets. The same case might be made for the city of Boulder, which has much higher prices than surrounding areas.

The buyers can hope that competition to serve that part of the market is extreme so they don't end up paying a lot more than they might have otherwise. With few attractive investments, I might have to take a look.

Is this a case where the government has decided to back the slow horse? Are the GSE's overexposed?

I think what it means is these higher priced homes in 80504 may move slower. I hope I'm wrong because I'm hearing tell that prices are getting hit hard, very hard.

My friends who live in Starwood love their homes and they have been distressed. If things begin turning up, that's something I like to report. I'll keep an eye on this. Thanks for your observations, guys.

Best,
SuZ
PML of Longmont, CO
0 votes Thank Flag Link Sat Jun 4, 2011
When have Fannie and Freddie ever been in the Jumbo business? The term itself "jumbo" implies a non-conforming mortgage. If you are referring to "Conforming Jumbos" AKA "Super Jumbos" AKA "High Balance Conforming Jumbos", then they are not getting out of the business at all, just lowering the "temporary" limits that were enacted. In California there will still be loan amounts to $625,500 in high cost areas as opposed to $729,750.
Web Reference: http://WeFixRates.Com
0 votes Thank Flag Link Fri May 27, 2011
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