Tuesday, August 28, 2007

Manhattan Beach-Beach Cities: Jumbo Loans

The market may be showing signs of resolving some of the issues that surround the Jumbo loan issue. Indymac announced today that they sold $240 million of AAA bonds backed by Prime Jumbo fixed rate mortgage loans and $350 million of AAA bonds backed by Prime Jumbo adjustable-rate mortgage loans.. However Indymac is not out of the woods yet although this news mat allay some fears.

This may mean that the secondary market is realizing that not all Jumbo loans are high risk loans. This bodes well for our market. You will still need a down payment and good credit to get a Jumbo loan. No doc loans are gone but I understand that some lenders are considering a form of the stated income loan with verifiable assets. I think this would be a good compromise for higher priced markets.

I talked to three lenders last week and all think the market may be showing signs of investors being ready to think about returning to the credit market. One of my favorite Mortgage guys, Brian Brady , has likened the current credit market to the NFL Draft picks.. everyone wants the players but no one wants to set the market by making the first bid.. but as he also notes Investors don't make money if they don't invest..

The market is still not in great shape and many areas are going to see more foreclosures over the next few months unless banks figure out some solution for loans that are getting ready for rate adjustments. Countrywide is still seeing share prices drop and Home Depot had to restructure the sale of one of its home distribution business by lowering the price from $10.3 billion to $8.5 billion. Sales volume in CA declined in July while prices increased slightly.
Update: August 29, 2007
Does Indymac know something we don't? The Los Angeles Business Journal in a post this morning notes that Indymac is hiring 600 new employees. Also as noted yesterday ... they are not only getting ready to make jumbo loans but are going to in-house them... that is keep them in their portfolio. So why would they do this? Ah... they do know something many have forgotten... people who take out jumbo loans document their income and have larger down payments... Hmmmm...Maybe the people who buy in the Beach Cities really can afford their homes...

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