Industry NewsMortgage

‘Jumbo conforming’ rates could come down

New securitization rules don't apply to most jumbos

Changes in the rules for selling jumbo mortgages to secondary market investors could mean lower interest rates for home buyers seeking loans that fall within the new $625,550 limit for purchase or guarantee by Fannie Mae and Freddie Mac in high-cost housing markets that takes effect Jan. 1. The Securities Industry and Financial Markets Association says it will allow Fannie, Freddie and Ginnie Mae to mix a limited number of the "jumbo conforming" loans -- no more than 10 percent -- in pools of conforming loans sold to secondary market investors for "To-Be-Announced" delivery. The TBA market is considered the most important secondary market for mortgages because bonds are traded even before the specific loans that back them are actually identified. "We expect higher balance borrowers to receive both rate relief and increased liquidity as was desired in the legislation, while retaining the overall liquidity of the TBA market," SIFMA managing di...