Biggest Buyers Hit Hard in Mortgage Fiasco

‘Jumbo’ loans dry up as subprime mess continues to spread

By Jonas Oransky, Newser Staff

Posted Aug 12, 2007 11:50 AM CDT

(Newser) – As the subprime mortgage mess spreads to homeowners beyond those with poor credit ratings, jumbo mortgages are under particular pressure, the New York Times reports.
An investment banker recently purchasing a $1.5 million home saw the interest rate spike from 8% to 13% in just three days. The rate for these mortgages is now higher than the rate for conventional 30-year mortgage.

Jumbo loans are those larger than the $417,000 limit on what Fannie Mae and Freddie Mac are allowed to buy, and the private market for mortgages securities has dried up. Particularly affected are the two coasts, where home prices are highest. “In California it has shut down the purchase market,” a Bay Area broker reports.

A home is offered for sale in Riverside, Calif. Monday, July 23 2007. Mortgage defaults in California soared in the second quarter to the highest level in 10 years, the result of weak home sales and sagging... (Associated Press)

Signs indicating a home for sale by owner at a reduced price are seen, Tuesday, July 31, 2007, in Cincinnati. With the housing and mortgage industries plunging deeper into distress, investors around the... (Associated Press)

y. But the Friday release of U.S. economic data lightened the mood somewhat. The U.S. economy grew at an annual rate of 3.4% during the second quarter of 2007. (AP Photo/Masao Goto Filho) (Associated Press)

A home is offered for sale in Riverside, Calif. Monday, July 23 2007. Wall Street suffered one of its worst losses of 2007 Thursday, leading a global stock market plunge as investors succumbed to months... (Associated Press)

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Biggest Buyers Hit Hard in Mortgage Fiasco

‘Jumbo’ loans dry up as subprime mess continues to spread

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$26B Mortgage Settlement a 'Modest' Help: Experts

Many struggling homeowners not covered in deal

Freddie Mac Bet Billions Against Homeowners

Has financial stake in limiting refinancing for struggling people

SEC Sues Ex- Fannie, Freddie CEOs

Firms wildly misrepresented exposure to subprime loans: feds

Ex-Banker: Yeah, Collapse Was Our Fault

So why haven't homeowners been bailed out?

Fannie Mae Needs Another $7.8B

Taxpayer bill for mortgage firm's rescue now $94B

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Biggest Buyers Hit Hard in Mortgage Fiasco

‘Jumbo’ loans dry up as subprime mess continues to spread

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OTHER STORIES ON OUR RADAR

subprime mortgages • mortgage • loans • Freddie Mac • home loans • Fannie Mae • investment bankers • homeowners

MOST POPULAR STORIES

[ By Views ]

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More Newser Stories

$26B Mortgage Settlement a 'Modest' Help: Experts

Many struggling homeowners not covered in deal

Freddie Mac Bet Billions Against Homeowners

Has financial stake in limiting refinancing for struggling people

SEC Sues Ex- Fannie, Freddie CEOs

Firms wildly misrepresented exposure to subprime loans: feds

Ex-Banker: Yeah, Collapse Was Our Fault

So why haven't homeowners been bailed out?

Fannie Mae Needs Another $7.8B

Taxpayer bill for mortgage firm's rescue now $94B

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Newser By Users

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