The Government has reached out to home owners who have conforming or FHA
financing. However if your mortgage is a jumbo (aka non-conforming); your options for refinancing are few…there is no HARP for you. Many home buyers used various types of mortgages to buy their dream or "move-up" homes a few years back during the loosey goosey days of mortgages and now are either dealing with or waiting for these large mortgages to adjust.
Recently I've added Jumbo mortgages back to my Friday rate quotes, including fixed and a couple of adjustable rates mortgages. The difference now is that people must actually qualify for their mortgage. No more stated income or qualifying at a teaser low interest only payment. And as I mentioned, there is no assistance for you unless your mortgage servicer is willing to do a modification.
As Diana Olick's video above addresses, banks have a large "bucket" of mortgages that are getting ready to go into foreclosure. Many are jumbos. Even if Obama's programs for loan modifications and refinances reached out to the high end home owner in need of a lower mortgage payment; if the home owner has lost their job, odds are against them.
The timing of no available mortgages for the high-end home owner couldn't be worse. For the past few years, the pricing was not attractive for jumbos. Someone with an option ARM, for example, would not want to nor probably qualify for the much higher rates if they wanted a more secure fixed rate product. This also prevents the jumbo home owner from being able to sell their home should they decide they can no longer afford it. Their home's potential prospects are limited to those with significant cash down payment to have a "high balance" loan limit (currently in the Seattle area, the 2009 high balance loan limit is $567,500).
The Seattle-Bellevue area also has a significant amount of high end homes. How many are waiting to go into foreclosure? This is one sector of the market who odds are will not see a bail out.
I can’t imagine the government helping with the jumbo loans. Not much has been done with regular conventional. thanks for your blogs
OMG! Your article here makes everything look scary especially for the high end homeowners. What else is the government doing?
Great article, this issue has been somewhat ignored in my opinion. There is a huge portfolio of jumbo loans out there that are coming due for an adjustment in the near future. In today’s market it’s very hard to see a payment reduction on a refinance of a jumbo mortgage because the current market rates are probably going to be higher than what they had before. In addition a large portion of these jumbo loans that were taken out have the borrower paying interest only which isn’t available to those with a higher loan to value ratio at most banks. A fully amortized loan is several hundred more per month than an interest only loan, which for a lot of people in this economy may prevent them from being able to afford their mortgage payments.
If you’re in a jumbo mortgage loan the best chance you have right now to lower your payment may be a loan modification. This process is not easy, and takes some time to complete but most mortgage lenders would rather help you stay in your home then to deal with a default. Contact a mortgage professional, or your current lender and find out what your options are as soon as possible because waiting too long can put you in a bad position to negotiate your modification terms.