Ryan Sherman,  in Lodi, CA

Houston, we have a problem...The upper end market is drying up before our eyes. Why are Banks hording money?

Asked by Ryan Sherman, Lodi, CA Mon Jul 6, 2009

Why are interest rates for Jumbo and Super Jumbo soo high, shouldn't the administration do something to help the $500,000 and above market? Check out these stats: (Very telling of where our problems are regarding lending/underwriting)

For all of San Joaquin Co. Jan 09 to date only 63 Homes sold between $500,000 and $999,999 for same period last year 120 Sold. 48% Decrease

For all of San Joaquin Co. Jan 09 to date only 5 Homes sold from $1,000,000 and Above for same period last year 12 Sold. 60% Decrease

Foreclosures represent approximately 75% of ALL Pending and Sold properties in San Joaquin County. Our REO listing inventory currently only comprises approximately 25% of listed properties (we know the ‘shadow inventory’ is out there), Short Sales now comprise approximately 50% of listings.

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Jennifer Bee…, Mortgage Broker Or Lender, Corte Madera, CA
Mon Jul 6, 2009
High balance conforming is under 6% with zero points and you can do super jumbo 5/1 interest only with 1.25 point at 5.375%. That is not so high. The real problem you have are the downpayment and reserves requirements in the super jumbo category and the fact that stated loans are gone. 20-25% down minimum and 6-12 months reserves.
The root issue is that investors are not buying jumbo loans and the banks do not want to use all of their capital holding them. The banks can make a lot more $ doing small loans and reselling them; then holding a 30 year note on a 2 million dollar home. A true bummer but a sign of the times.
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Ryan Sherman, , Lodi, CA
Mon Jul 6, 2009
Jennifer - Thanks for responding. Interest rates are decent relatively speaking - but you have to pay 1.5 - 2 pts to get there and along with the burdensome reserve requirements a good number of 'move up' buyers are staying out of the game. The pendulum needs to swing back to a more level headed approach in lending/underwriting. I understand money was too fast and easy in 2003-2006 but now it's too tight to help the economy/housing recover.
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