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Dire prediction for jumbos

Without federal help, default rate set to soar

In springtime, when all things hopeful and botanical bloom, there was a widespread sprouting of press announcements, particularly from the major banks, about increased dollars allocated to the business of jumbo loans. Alas, the soil for such pronouncements has proven poor. A dearth of jumbos persists and the market appears to be wilting. As an executive at one mortgage research company told me, earlier this year there was a flurry of activity with Bank of America and other major banks announcing jumbo loan programs, "but I haven't heard anything since then. The market doesn't appear to have changed much. I think some of these announcements were made to generate good press. The banks were saying, 'Hey, we are open for business -- don't forget us,' but they weren't doing anything more than what they were doing before." Jumbo loans are basically any mortgage where the principal amount exceeds the statutory purchase limit of Fannie Mae and Freddie Mac, which has been s...

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