Freddie Mac To Buy Conforming Jumbo Mortgages In High Cost Markets From Foud Lenders
|April 18, 2008|
McLean, VA – Freddie Mac has agreed to purchase billions of dollars of new conforming jumbo mortgages with original loan amounts up to $729,750 from Wells Fargo Home Mortgage, Chase, CitiMortgage and WaMu. Freddie Mac conforming jumbo mortgages can be used to finance properties in hundreds of high cost markets designated in the Economic Stimulus Act of 2008 President Bush signed on February 13.
Today's announcement marks the first large-scale effort to jump-start the stalled jumbo mortgage market under the Economic Stimulus Act, which temporarily raised Freddie Mac's conforming loan limit from $417,000 to as much as $729,750 through December 31, 2008. Freddie Mac's purchase of conforming jumbo mortgages is restricted to 224 high cost markets where median home prices exceed Freddie Mac's $417,000 loan limit.
As a result, qualified borrowers can now apply for an array of fixed-rate or adjustable rate conforming jumbo mortgages that will be less expensive than non-conforming jumbo loans in high cost markets. Borrowers can use Freddie Mac conforming jumbo mortgages to finance up to 90% of a property's value.
Because Freddie Mac is buying the new conforming jumbo mortgages for its portfolio, Wells Fargo, Chase, CitiMortgage and WaMu will have instant liquidity and can offer a stable jumbo market rate to qualified borrowers. By working with Wells Fargo, Chase, CitiMortgage, WaMu and other national lenders, Freddie Mac expects to finance between $10 and $15 billion in new jumbo mortgages in 2008.
"Purchasing conforming jumbo mortgages for our portfolio shows how we can bring new liquidity to markets other investors have all but abandoned and make full use of the new tools Congress gave us to help restore stability during the current housing crisis," said Freddie Mac Chairman and CEO Richard Syron. "We initially expect conforming jumbo mortgages to have rates that are as much as half a percentage point below the jumbo market rate in many of these high cost markets."
"I want to thank Wells Fargo, Chase, CitiMortgage and WaMu for working with us and enabling us, in a new way, to fulfill our public mission to America's lenders and borrowers," Syron added.
"CitiMortgage applauds Freddie Mac for agreeing to buy loans for these qualifying borrowers, and we are looking forward to working with Freddie and borrowers to improve housing affordability in these higher cost markets," said Bill Beckmann, CitiMortgage president.
"These new conforming jumbo mortgages will reduce homeownership costs for families in high-cost areas," said Dave Lowman, CEO of Chase Home Lending. "Freddie Mac's involvement will help increase availability."
"We value our relationship with Freddie Mac which enables us to collectively do great things for consumers," said Mike Heid, co-president of Wells Fargo Home Mortgage. "While Wells Fargo has offered jumbo loans directly to consumers throughout the current market correction, this important agreement provides a reliable investor for loans in high-cost areas which, in turn, further broadens our ability to serve these customers."
While specific product availability may vary by lender, Freddie Mac has said it will buy 15-, 20-, 30- and 40-year fixed-rate, fully amortizing conforming jumbo mortgages; 30-year fixed-rate mortgages with 10-year interest-only periods; fully amortizing 5/1 adjustable-rate mortgages (ARMs) and 5/1 ARMs with 10-year interest-only periods. Qualified borrowers can also obtain cash-out refinance conforming jumbo mortgages that provide a maximum cash-out of $100,000.
For more information on Freddie Mac conforming jumbo mortgage products, visit www.freddiemac.com/singlefamily/increased_limits.html.
Source: Freddie Mac