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Editor's Note: Bank of America, the biggest mortgage lender in the U.S., is among major banks that will begin offering jumbo loans at better rates than have been available. Here are excerpts from a recent article on the subject by Kenneth Harney, a nationally syndicated real estate columnist with the Washington Post Writers Group:
"New money is about to flow into an area of the real estate market that has been hardest squeezed by the credit crisis: mortgages too large to be purchased or backed by Fannie Mae, Freddie Mac, or the Federal Housing Administration.
"Though heavily concentrated in California, portions of Florida, and the Northeast, higher-cost neighborhoods throughout the country traditionally have depended on the ready availability of “jumbo” mortgages to finance houses.
"But with the collapse last year of the private mortgage bond market on Wall Street, homebuyers, builders, and refinancers who relied on jumbo financing were left with few sources – except at punitively high interest rates and huge down payments.
"That's about to change. Major banks are heading into the jumbo segment, originating big loans at affordable rates – not for Wall Street bond traders but for their own investment portfolios."
"Bank of America's new program requires hefty liquid resources – six months of principal, interest, property tax, and insurance payments in reserve – plus fully documented income, solid credit scores, and a full appraisal."To comment on this article, please visit our blog.