A Big Boost for Buyers Seeking Jumbo Loans
New money is about to flow into a part of the real estate market that has been squeezed hard by the credit crisis: mortgages too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration.</br></br>Higher-cost areas throughout the country traditionally have depended on the ready availability of "jumbo" mortgages to finance houses. Such neighborhoods are heavily concentrated in California, portions of Florida and the Northeast, including the Washington region. With the collapse last year of the private mortgage bond market on Wall Street, home buyers, builders and refinancers who relied on jumbo financing were left with few sources -- except with punitively high interest rates and huge down payments.</br></br>Now, though, major banks are heading into the jumbo segment, originating big loans at affordable rates -- not for Wall Street bond traders, but for their own investment portfolios.</br></br>Bank of America, the country's largest mortgage lender, is rolling out a large program to finance jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5 percent range. The loans will be available through the bank's retail network and also through its Countrywide Home Loans subsidiary. After April 27, Countrywide will be rebranded -- shedding the name it has had since 1969 -- and morph into Bank of America Home Loans. Bank of America acquired Countrywide, once one of the biggest subprime lenders, last year.</br></br>Barbara Desoer, the bank's head of consumer real estate operations, said there's "a real need" for capital in the jumbo arena, where interest rates last fall sometimes exceeded conventional loan rates by three to five percentage points -- if financing was available at all.