While the media continues to focus on the collapse of the U.S. subprime mortgage market, it is also worth noting the recent decline in lending activity and rise of delinquencies for the highest end of homeowner loans - JUMBO mortgage loans. According to LPS Applied Analytics, a mortgage data service based out of Jacksonville, Florida, about 2.6% of the homeowners who took out JUMBO mortgage loans during 2008 are ALREADY at least 60 days delinquent...while this rate pales in comparison to the current 20% delinquency rate affecting 2008 subprime borrowers, it is still significant because this is the fastest pace of Jumbo delinquencies in at least the last 15 years, when LPS began tracking the data.* The national average for a 30 year fixed rate jumbo mortgage was 6.57% this week compared with 5.34% for a prime conforming loan. According to BanxQuote CEO Norbert Mehl, the spread between Jumbos and primes had been only about 20 basis points (0.2%) "for several decades"...however, since August 2007 + the collapse of the subprime mortgage market, the spread has consistently stayed in between 100 and 200 basis points (1.0%-2.0%)
* A prime conforming loan is a mortgage available to borrowers with top credit scores that is eligible for sale to either Fannie Mae or Freddie Mac...currently the Fannie-Freddie cap is set at $417,000 in most places and up to $729,750 in areas with higher home prices
* JUMBO lending activity slowed in the 4th quarter of 2008 to $11 Billion, or 4% of the mortgage market (vs. 14% in 2007)...the lowest quarterly amount since Inside Mortgage Finance started tracking data back in 1990
* Top 5 U.S. Jumbo mortgage lenders are: Chase Home Finance LLC., Bank of America (BAC), Washington Mutual (aka the artist formerly known as WM), Wells Fargo (WFC) and Citigroup (C)...the Top 5 Jumbo lenders originated a combined $55.3 Billion in jumbo loans during 2008, they lent just $4.3 Billion (less than 8%) of that total during the 4th qtr of 2008
* According to LPS Applied Analytics, the average credit score for a 2008 jumbo loan was 762
* President Barack Obama's Homeowner Affordability and Stability Plan, announced this week, has NO provision to help JUMBO mortgage borrowers
bloomberg.com/apps/news?pid=newsarchive&sid=ab4hyMC6aJf0
Data Courtesy: Bloomberg
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