Jumbo loan lenders are hard to find these days. Sure, many lenders have jumbo programs on their rate sheets, but most of these programs are priced very unattractively.

Here in the San Francisco Bay Area, we need jumbo lenders. On the retail side, Wells Fargo, Bank of America, Union Bank, and First Republic Bank offer attractive terms.

On the wholesale side (the channel I work through), we don’t have very many choices any more. ING, First Federal Bank, and US Bank are the only lenders that we work with that have attractive programs at this point in time. I understand that LIME Financial will be offering some competitive jumbo terms shortly.

Are there any suggestions out there for jumbo lenders with attractive programs?

According to this article, Wachovia Corp. will be waiving the pre-payment penalty for clients who have an option ARM loan.

Will this move be duplicated by other option ARM lenders, such as Washington Mutual, Downey Savings, Chevy Chase Bank, and Countrywide? Stay tuned.

Ironically, the rates on many of these option ARM loans are going down, and will probably continue to go down for awhile.

Although the rates may continue to go down on these loans, I think it would be wise for homeowners with this type of loan to check out other options. Property values in the future are a concern of mine. If a homeowner waits to refinance because their rate is attractive now, they may not be able to refinance later because their property value may be lower. It would be wise for these homeowners to contact a competent mortgage advisor to find out what their options are right now. 

My client recently received a letter from Washington Mutual stating that they were reducing his equity line from $939,700 to $282,000. We hear about lenders reducing the amount of available credit on equity lines every day. This case, I believe, is an example of a lender taking advantage of a customer because of their own problems.

 WAMU approved my clients for a 90% CLTV equity line based on an appraised value of $2,600,000. It was a fully documented loan, and it closed in January 2007.

After receiving this letter, my client and I had a conference call with a supervisor from the WAMU consumer loan division. He stated that the decision to reduce the equity line amount was based on the results of an automated valuation model (AVM) of the home that determined that the home had declined in value from $2,600,000 to $2,398,252. My rough math tells me that the value, based on their AVM, dropped 8 to 9%.

Because of a 8% to 9% drop in value, WAMU arbitrarily decided to cut the amount available by approximately 70%! Over one year later they decide to change the CLTV from 90% to roughly 70% based on a computer model of an expensive home, not even a full appraisal!

Both myself and my client understand that WAMU has the right to cut the available balance of the equity line based on their determination of value. What we do not understand is why they cut the CLTV from 90% of the perceived value to 70% of the perceived value.

My client is paying a rate based on a 90% CLTV. Did they offer to reduce his rate based on a 70% CLTV? No.

 We asked the supervisor if he could change the amount available back to the 90% CLTV that the original loan was based on. This would reduce the available line amount from $939,700 to $760,000. He said no. He said my client could provide an appraisal from an appraisal firm of WAMU’s choice, or a property tax assessment. Then they would consider increasing the line.

 The actions of WAMU in this case stink! I truly believe that they are cutting my client’s available credit because of their problems. What do you think?

The credit crunch we are currently experiencing has made it more important than ever to have the best possible credit score. Lenders generally have raised the minimum credit score required. In addition, they are differentiating the rates offered by the customer’s score in more increments than they have in the past.

I came across a great article with tips on how to improve your score. I hope you find some insight in the article to help you improve yours!

My goal with this blog is to be provocative with the subject of jumbo loans as the backdrop.

Let’s get started. Unless you have been asleep for the last four months, you know that there has been a crisis in the mortgage market. The Fed has lowered rates, yet there continues to be a huge problem with foreclosures. Today it was announced on CNBC that Hank Paulson, the Treasury Secretary, is looking at ways the government can help with this huge problem.

Here’s a couple of suggestions I have thought of to attack this problem from the low end and high end of the real estate market.

For first time home buyers, make the size of their down payment tax deductible, like mortgage interest. It would be a  one -time deduction. It would encourage buyers to have equity in the property, instead of using 100% financing. This tactic will spark sales on the lower end of the market, which will then help the values of existing homes increase. Increasing values help the people who have sub-prime loans or people who have rates resetting refinance easier because lenders like equity in the property.

For all homeowners, eliminate the cap on the amount of mortgage interest that can be deducted. Imagine the amount of sales this will create in the luxury home market!

I admit these ideas are a little crazy. However, I truly believe that “out of the box” ideas are needed in order to put this crisis behind us.