What’s with the Kool-Aid doom-and-gloom “Jumbo loans are going to disappear”

[Coronita]

Ok… I’m probably going to be the first to say this that’s going against the grain. I keep seeing a lot of folks post something like “Jumbo loans are going to vanish. etc.etc.etc.” Pardon the this viewpoint, but aren’t we just drinking the “doom and gloom” kool-aid that also portrayed in the media a little too much???

Yes, secondary markets are going to contract, but do we really expect that well doc’ed, good income, with sufficient down are really going to have “problems” finding financing beyond paying higher interest rates from a historic low?

[JWM in SD]

Yes, because we are heading into a severe recession and the number of those well documented high income borrowers is going to shrink. I wish it weren’t true because I could be one on them.

[JWM in SD]

Yes, because we are heading into a severe recession and the number of those well documented high income borrowers is going to shrink. I wish it weren’t true because I could be one on them.

[JWM in SD]

Yes, because we are heading into a severe recession and the number of those well documented high income borrowers is going to shrink. I wish it weren’t true because I could be one on them.

[bsrsharma]

I don’t think they will vanish. But once bitten lenders are going to demand larger down payments.

A random thought:

Loan amount Down payment

500K 20% = 100K
700K 30% = 210K
1M 40% = 400K

As you can see, the qualifying pool will shrink like melting snow.

[bsrsharma]

I don’t think they will vanish. But once bitten lenders are going to demand larger down payments.

A random thought:

Loan amount Down payment

500K 20% = 100K
700K 30% = 210K
1M 40% = 400K

As you can see, the qualifying pool will shrink like melting snow.

[bsrsharma]

I don’t think they will vanish. But once bitten lenders are going to demand larger down payments.

A random thought:

Loan amount Down payment

500K 20% = 100K
700K 30% = 210K
1M 40% = 400K

As you can see, the qualifying pool will shrink like melting snow.

[Coronita]

And why are the down payments higher for larger amounts?

[Coronita]

And why are the down payments higher for larger amounts?

[Coronita]

And why are the down payments higher for larger amounts?

[temeculaguy]

The number of borrowers may shrink but the loans will still exist for the well doc’d people with decent downpayments, and yes they will pay more for a jumbo like they used to. Don’t believe the hype that there will no more loans over 417, just less of them. This will still damage the market prices, like taking 10% of the cars off the freeway and traffic get 50% better. Now as a buyer who has to pay a full point higher for a jumbo and you are comparing two houses near the jumbo mark, one might be only 30k higher but it takes your whole loan jumbo so the payment goes up significantly when comparing the two side by side, that will have an effect on the comps going the opposite way as the subprime thing did to prop up the comps by taking out the bottom of the market, I see median price taking a hit 90 days from now as a result, taking the industry’s last talking point away. We aren’t going to have to wait until 2012 for this to play out, I see the next nine to twelve months as worthy of pay per view status.

[temeculaguy]

The number of borrowers may shrink but the loans will still exist for the well doc’d people with decent downpayments, and yes they will pay more for a jumbo like they used to. Don’t believe the hype that there will no more loans over 417, just less of them. This will still damage the market prices, like taking 10% of the cars off the freeway and traffic get 50% better. Now as a buyer who has to pay a full point higher for a jumbo and you are comparing two houses near the jumbo mark, one might be only 30k higher but it takes your whole loan jumbo so the payment goes up significantly when comparing the two side by side, that will have an effect on the comps going the opposite way as the subprime thing did to prop up the comps by taking out the bottom of the market, I see median price taking a hit 90 days from now as a result, taking the industry’s last talking point away. We aren’t going to have to wait until 2012 for this to play out, I see the next nine to twelve months as worthy of pay per view status.

[temeculaguy]

The number of borrowers may shrink but the loans will still exist for the well doc’d people with decent downpayments, and yes they will pay more for a jumbo like they used to. Don’t believe the hype that there will no more loans over 417, just less of them. This will still damage the market prices, like taking 10% of the cars off the freeway and traffic get 50% better. Now as a buyer who has to pay a full point higher for a jumbo and you are comparing two houses near the jumbo mark, one might be only 30k higher but it takes your whole loan jumbo so the payment goes up significantly when comparing the two side by side, that will have an effect on the comps going the opposite way as the subprime thing did to prop up the comps by taking out the bottom of the market, I see median price taking a hit 90 days from now as a result, taking the industry’s last talking point away. We aren’t going to have to wait until 2012 for this to play out, I see the next nine to twelve months as worthy of pay per view status.

[bsrsharma]

And why are the down payments higher for larger amounts?

 They are riskier. Can't sell to GSE. Lender has to hold due to lack of MBS support.

[bsrsharma]

And why are the down payments higher for larger amounts?

 They are riskier. Can't sell to GSE. Lender has to hold due to lack of MBS support.

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