High-End Real Estate Financing Woes…

Washington, it would appear, has chosen not to be  inclusive in it’s considerations of higher loan amounts, snubbing a very large market segment in several parts of the country. Certainly, in southern California. The banking industry, without Fannie/Freddie guarantees, refuse to deploy a more balanced risk spread into their mortgage product mix, in an attempt to offset  the  property assets that continue to swell back onto their own books. Meanwhile,  those with higher loan amounts who are in appropriate credit, income, and equity positions are being left out, un-acknowledged in terms of their own refinancing of adjustable rate mortgages. And this, is to say nothing of those who are ready with similiar preparedness to purchase in the upper price ranges.

True to his word, President Obama has deployed himself  as a Robinhood crusader who’s housing policy, at least for the moment,  is exclusive to the middle class. The banking industry seems to be content with the continued use of over-responsive tightening of mortgage product guidelines, that do little more than perpetuate the current cycle. Banking institutions in this market, seem unable to breath the air of tempered and even balance in an effort to help themselves.

An article written today by Nick Timiraos, in the Wall Street Journal, covers the perils of todays jumbo home financing ($729,750 and above).

Here’s a couple excerpt’s…

“If somebody has the income, the equity and the credit rating,” they should qualify for a loan.”

“Many homeowners in high-priced markets are experiencing similar difficulties, and are left with few options other than to raid their savings or retirement accounts and use the cash to “buy down” their mortgages. In some cases, home buyers need to put up a large down payment, often 25% or more, to qualify for a jumbo mortgage. Others are bypassing jumbos altogether and putting up enough cash to become eligible for a lower-rate conforming loan.”

“Real-estate professionals say that the lack of financing for high-income consumers is putting extra pressure on affluent communities and causing prices to fall even further. “The million-dollar-and-above market is sinking like a lead weight”

“ING Direct, a unit of ING Group NV, is one of the few lenders that is boosting jumbo originations, though it requires a minimum 30% down payment in the most expensive housing markets, up from 20% earlier last year. For condos, ING requires a minimum 45% down payment.”

“If you have been able to … save for a down payment, that to us speaks volumes about your character,” says Bill Higgins, ING’s chief lending officer.”