BofA out to make jumbo loans
Pricing slashed, but not all borrowers will qualify
By Matt Carter, Friday, March 20, 2009.Bank of America has cut interest rates on jumbo mortgage loans in the hopes of expanding its share of what the bank sees as an underserved market for loans too big for purchase or guarantee by Fannie Mae and Freddie Mac.
Not everybody will qualify for the 30-year, fixed-rate loans of up to $3 million that Bank of America has been offering at reduced rates since January, with interest rates currently in the high 5 percent range.
In order to qualify, borrowers will need strong credit (a 720 FICO score or above), down payments of 20 percent or more, documented income, full appraisals, and assets sufficient to cover six months of payments, said Bank of America product management executive Vijay Lala.
But Bank of America thinks its fixed-rate jumbo loans will prove to be attractive to qualifying borrowers, because many competitors will be hard-pressed to match its rates.
Jumbo loans have become more expensive and harder to come by since September 2007, when rising delinquencies gave investors who fund most home loans through the purchases of mortgage-backed securities cold feet about "private label" securities that don't carry the backing of Fannie and Freddie.
Unlike some lenders who must securitize and sell the loans they originate, Lala said Bank of America has plenty of room on its balance sheet to fund jumbo loans and hold them for investment, and is "putting the pedal down on our pricing and going after this market."
Lala said Bank of America and Countrywide Financial Corp., which it acquired last year, funded $16.12 billion in jumbo loans in 2008. Although jumbo loan funding dropped to just $2.4 billion in the fourth quarter, Bank of America is already seeing "very nice volume" since introducing its more aggressive pricing.
Bank of America will only offer the loans directly to consumers -- and not through independent mortgage brokers -- through retail bank branches and Countrywide Home Loans (which will be re-branded Bank of America Home Loans on April 22). Lala said he expects many borrowers will be existing Bank of America customers. ...CONTINUED
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Submitted by Joseph Bridges on March 20, 2009 - 5:00pm.
Go after the market where you can find a niche. BofA is going after the big market.
So the real question becomes how do real estate agents use this to help clients?
Networking with a BofA lender and targeting higher end clients might be beneficial to both parties.
It is always worth providing this information to ones clients and having another lender to refer to clients who seek another opinion.
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Submitted by Richard Stabile Bergen County Real Estate on March 27, 2009 - 5:58am.
This is good news, about 5 weeks ago Wells Fargo started the same program almost. We need these Jumbo's at reasonable rates for good buyers.
In my market, Bergen County New Jersey. Many of our homes need Jumbo's For months prior it was only Savings and Loans up to $1,000,000. Now the upper market has a chance. I read that in Mahattan in the 4th quarter most luxury apartments sold for all cash. This was a problem, but now it is slowly resolving.
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Submitted by Karu cric on June 28, 2009 - 11:32pm.
Hi,
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Submitted by annie h on November 10, 2009 - 2:28am.
Brokerage is the main profit in many of the business this has become the retail market and easly we even can bye or sell our lands.
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Submitted by bendjamin stokson on November 16, 2009 - 6:05am.
This is good news, about 5 weeks ago Wells Fargo started the same program almost. We need these Jumbo's at reasonable rates for good buyers.
In my market, Bergen County New Jersey. Many of our homes need Jumbo's For months prior it was only Savings and Faxless Loans up to $1,000,000. Now the upper market has a chance. I read that in Mahattan in the 4th quarter most luxury apartments sold for all cash. This was a problem, but now it is slowly resolving
Submitted by bendjamin stokson on November 18, 2009 - 8:12am.
B of A is only trying to fatten their bottom line at the cost of the consumers. Look at the choices they are offering to the consumer. Take a mch higher interest rate or pay more points up front. Either way, B of A winds up with more “money” in its pocket, cash or solid assets that it can use to pay off the loans the “government” (really the US consumer) gave to them. Jumbos don’t help refinance the foreclosures. Most of those mortages were conforming loans more about such loans
Submitted by Ted Mallson on December 13, 2009 - 12:44pm.
Thanks for such an interesting article. Despite the fact that it is 8 months old it was still useful for me because I am doing a bachelor work on the crisis impact on loan system. This information about jumbo loans will be really useful for me. Oh and thanks for all your blog overall, it is really awesome.
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Submitted by annie h on December 14, 2009 - 9:42pm.
Real estate is the major business in these days where many of the people have reached to the highest level.
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Submitted by dasfgasdg dsafhdsaf on December 16, 2009 - 9:07pm.
What is jumbo loans?Where it is used?What is the advantage of it?
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What should be the Ideal Strategies in real estate?
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Submitted by erfef ferw on December 21, 2009 - 9:08pm.
Why for home loans the banks are calculating the interest rate?
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Submitted by Aman Burma on January 4, 2010 - 4:59am.
In spite of the present slow economic situation, the housing market is gaining positive slope in regular basis. I think the current home loan interest rates are causing the boom. Thanks for sharing such an interesting post.
Submitted by Jack Kallis on January 21, 2010 - 5:43am.
It is a very good news that Bank of America has cut interest rates on jumbo mortgage loans. And such facility should be provided by all banks.
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Submitted by ronny maxwell on February 5, 2010 - 1:45pm.
From the perspective of a potential customer I think Bank of America just made a very wise decision. It needs to adjust the borrowing standard to the target market, this way the financial products would be better absorbed. People need cash advance loans now more than ever.
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