Credit Crunch/Jumbo Loans

Do you have a firm commitment yet? Are you concerned from a rate perspective or because your lender may not follow through with its obligation to lend to you?

iam so glad people are panicing about the sub prime slow down,it ju8st goes to show evrybody how many fake loan originators are out there and are leaving the business thank god there are leaving now!!!

and to my friend above you really need to stop panicing ok?? you need to teach your self how to and where to place these type of loan scenerios i use thornburg mortgage for jumbos,ttul.

I would be VERY CAUTIOUS-

For example, Wells Fargo, the nations' LARGEST Residential 30 Year Jumbo Loan provider raised its rate from 6-7/8% to 8% OVERNIGHT!!!!

http://www.cnbc.com/id/20107397

That's MORE than a FULL PERCENTAGE point increase in less than 12 hours!

Mainstream America has no clue just how bad the meltdown is right now. Alt-A? AHM just filed for bankruptcy and their specialty was Alt-A. So much for Subprime being an isolated incident. AHM didn't even deal with Subprime but got hosed.

Panic has set in the credit market. It still has not set into the mainstream public. Once it does... watch out!!

Good luck,

MMAfia

We locked in our 30-year jumbo last week at 6.75. We were hoping rates might go down because treasury yields were falling, but obviously the credit crisis puts everything in a whole new context. Now we're happy we took what we were offered, because it seems like rates are guaranteed to go up. Whether we'll be happy we're buying in this market remains to be seen.

only the strong will servive people let the peewees get out of here its about time

i did a 6 month lock a whille back....I would be nervous if you plan to put less then 20-30% down r want 2nd piggyback and or have credit score below 700. you probably will pay more but everything else should be ok

Time to stock up on extra oxiclean and clorox to clean the new shit stains in your pants.

Wanted some clarification on which lenders are worth rate shopping during this "wild ride:"

#5 which bank did you get 6.75 no points for jumbo 30 yr fixed? did you put 20% down?
#3, how does Thornburg do on jumbo 30 yr fixed loans? are their rates generally better than a bank like chase?

Go to INGDIRECT and get a 5/1 ARM for 5.875%. The average person sells their home every 7 years so why would you want to pay the premium for a 30 year loan! I continue to be amazed by people who pay long term rates for short term money.

Techman is absolutely right. Use ING Direct for a 5/1 ARM or a 7/1 ARM. They only loan on condos, not co-ops. Best mortgage rates and very straight forward pricing.

and would of happened if your 5/1 expired today.

chase sucks with jumbo mortgages!!!

what we were quoted:
ING 6.25% on 7/1
Thornburg is offering 7.5% on 7/1 arm today.
Chase 6.625 on 7/1 arm
Chase is offering 6.75 fixed 30yr and well over 2 points! (this changed overnight, and they do not have anything worthwhile on jumbos as of today)

That's great mission. Those quotes are accurate as of today?

that's what we dug up today - but still checking out a few other options.
also realized that some mortgage brokers will do better, as they are going directly to savings banks. Banks like chase & Bank of A are not gonna help in terms of jumbo loans this week at least....the rest agree?

JNB, read this:

http://online.wsj.com/article/SB118644741706689960.html?mod=hps_us_pageone

when you have a rate you can live with, most articles on this subject are saying "Lock it In" and just be happy with what you have...
other options try ridgewood savings bank (quoted 6.75% yesterday). some more lenders are listed on interest.com at 6.625% and 6.75% no points, but do your research on these lenders on that site. however, much better jumbo rates than a bank like chase..

problem isnt for jumbos but jumbo asset verification loans. those rates have gone up 1%

#10, folks who pay a premium for the 30yr want security of not having rates shoot up their asses by the time they have to adjust and/or refinance (in the event that they stay put). Or, if the market tanks at the precise moment the are trying to unload their place. its happened before at much higher rates than these. Wasn't pretty then, and won't be pretty this time either.

The typical adjustible rate load has a maximum increase of 2% per year. That means that if you take out a 5/1 ARM in Aug, 07' at 6.25% instead of a 30 year fixed at 6.75%, then the worst case scenario is that in Aug 2012 it will rise to 8.25%, which is only 1.5% more than the 30 year rate. Now if you wanted to play it safe you could bank the 0.5% that you will save each month so that at the end of the five years you would have 2.5% of your principle in the bank plus a little interest on it. So, in the worst case scenario you are still more than 1% ahead of the 30 Year fixed option through year 6. If interest rates continue to rise big time through year 7 you could be up to 10.25%, which overall would put you a little bit behind the 30 year fixed option, but not by as much as you might think after taxes.
Now on average you will be moving to a new home by this time, so speculating on year 8 doesn't make sense for most people.
That said, if you are absolutely sure you won't be moving in the next 7-10 years, expect your income to stay relatively flat, and are concerned about major interest rate hikes, then it probably pays to go for the 30 year fixed. You will sleep a lot better.
On the other hand, if you a buying a 1 bedroom and are pretty sure that you will be trading up sometime in the next 5-8 years when you get married or have kids,etc., then it is crazy to pay long term rates for a short term loan.

I agree with techman. I used to play it safe for RE transactions. Now I will only go for ARMs these days. I have not stayed at a place for more than 6 years. Even when I thouht I found a dream home I moved within 5 years for something better.

t

thanks everyone, to be safe took out a 10/1 arm at 6.75. Higher than a couple months ago, but at least I've got something locked in

Dont play it safe #22, when enough morons like you get hurt, prices will come back to normal. Be gleeful, be glib about it, people like you are the typical product of this type of market. So overconfident things can never go wrong again.

#24 fyi, found a 30 yr fixed from ridgewood bank @ 6.875 no points vs. the 10 yr arm @ 6.75.

apologies if this sounds like a dumb question: do you have to have a signed contract to lock in a mortgage rate?

We've finalized the contract on the property we want to purchase but are feeling nervous to sign given the current market conditions. The bank said they'd lock in the rate once we get a signed contract to them. Is this standard or have people locked in a rate without the signed contract?

you can get pre-qualified without a contract but if you want a real commitment letter from a bank you will need to show a contract has been signed

just got flattened by chase:
they did not lock in the jumbo rate like we asked a week ago @ 6.75. now we have a non-jumbo loan which is not that bad at 6.5% but we have to take a line of credit at 8.55% for a lot of $$!!!
anyone think locking in a line of credit (5yrs) wise at this crappy rate?
the only reason we're moving forward is we can close fairly quickly with them, or we have to shop around again, spend more time, and see what we can get.
wow, it's a pain to get a jumbo loan right now-- anyone get hit with this?

Astoria Federal is still doing jumbos at decent rates. My friend locked a 5/1 Jumbo at 6.25 yesterday.

A lock-in does not necessarily guarantee a close. I was locked-in a 30 year jumbo loan and was set to close tomorrow and guess what...the loan just got pulled! I was offered different products of course (regular conventional, PMI, etc.) but I declined. I need to rethink buying right now; this market is a bit too volatile.

Wow, that is really scary. Did you have a commitment letter? Can you tell us what bank?

Yes, I had a commitment letter. Quicken, a Fannie-Mae lender--one of the few that banks were guaranteeing. And yes, that is scary. I have great credit (high 700's) and VERY stable, high income. That to me is a sure sign of just how nervous lenders are...

Unbelievable, wonder whether you have any legal recourse. Assume it was a jumbo loan? What reason did they give you for withdrawing?

Don't mean to be nosy, it's just that I'm in the process of getting a commitment letter and your story makes me so nervous.

whats your take on 15 year fixed? you can get it a lower rate than 30, and pay off more equity

if you can afford the higher monthly payments, go for it.

forced_to_register:

I don't get it - you had a contractually signed 60 day letter of committment for a specific mortgage vehicle, and your mortgage lender simply declined to honor the contract? It doesn't sound right - what's the point for the consumer of locking in a rate if a bank won't honor its contractual committment at a whim? The only point to a contractual lock is that it is exactly that for both parties - a contractual lock. We had a locked rate of 6.50% 30 year fixed (jumbo), and OUR mortgage lender even let me take out two five day extensions (for which I paid .001% of the total loan amount for each extension) when our closing got delayed, by which time the recent rate adjustment had just been put into effect.

What your lender did sounds wrong, or you didn't have a contractually signed committment letter, or that contract had very strange 'out clauses' for your mortgage lender that you, your lawyer, and/or your mortgage broker didn't reveal. A mortgage lender absolutely, positively CANNOT break a contractual lock agreement. It's illegal. So something you're explaining doesn't make sense.

To clarify: they didn't change the rate (yes, it's locked and they can't change it!)... what they did was they simply pulled the product off the shelf!

This has occurred to others, and has been discussed by the mainstream media in other parts of the nation. Whether or not to take legal action is up to the buyer's discretion.

Just another ominous sign of what's to come. Mortgage lenders would never resort to pulling products off the shelf, unless they were in dire circumstances (which they are for many products). Wall Street simply STOPPED buying all the repackaged mortgages, no one knows what they should actually be worth and the market has basically shut down and on pause. In the meantime, the Fed and other Central Banks have injected cash into the system to prevent an all-out collapse.

As I mentioned earlier, this is in fact a credit crisis or 'crunch' as they call it, and guess what? Strange, unfair things occur in crisis.

So far, we've seen the very tip of the iceberg. Wait until the majority or ARMs reset in Q1 next year. We may have multiple relapses similar to the one we're going through right now.

MMAfia:

Still doesn't make sense. Rate change or not, they had a signed contractual agreement. If the mortgage lender wants to pull that mortgage vehicle, they're entitled to, of course, but they are contractually and legally obbligated to honor the outstanding committments already signed, sealed, and delivered. Unless, as I said, there's some strange verbage in the contract giving them the right to do that in the first place. But then a lawyer should have seen that and struck it on sight. As I said, I had the same issue, having just closed myself - but our mortage lender even let me take out two five day extensions as these rate changes were flying.

So I still say that something's fishy here. We're not getting the entire story.

Perhaps- forced_to_register, any additional input?

pseudonym - when you say you "just closed" exactly what date? This mess with the mortgage market is VERY recent, like 5 days ago recent. If you closed 2 weeks ago it's a completely different story. Volatility is back up boys and girls, markets are changing on a dime and can be very unkind.

Closed about seven days ago...

yes MMAfia that's exactly right--the product was pulled off of the shelf. It can happen and it IS happening and there is no legal recourse Psuedonym.

That is the entire story--nothing fishy, just common sense. Think about it. If lenders are getting the rug pulled from beneath them (as are many), then how can they possibly guarantee a loan

As I understand it, there were actual proceedings interrupted because the products were no longer being backed.

sorry, closing proceedings...

Guess I should be glad I locked in my 30 year at 6.5%, then.

I'd be happy with a 30 year 6-1/2%. This thing is still reverberating throughout the system. Stay tuned.

#45 - yep - duh?! Usually your comments are pretty good - but that last one is pouring salt into some people's wounds.

nova77:

You're right - I apologize. It was just a comment to say that in retrospect, I felt fortunate - but it came out wrong. Sorry.