NO MONEY DOWN — FOR DOCTORS Who’s still able to get jumbo mortgages from banks with no down payment required? Why, borrowers in “lucrative professions” of course, explains Nancy Sarnoff. She profiles a CPA and a tax attorney who were recently offered a million-dollar loan with no money down and no mortgage insurance requirement — from BBVA Compass — to help them purchase their West University home. Among the more prized groups for such “professional mortgages”: doctors and dentists. Such programs are often targeted toward cash-poor graduates just out of medical school, and don’t take student loan payments into account.” [Houston Chronicle]
Remember a month ago, when the Chronicle reported that high-priced homes in Houston were selling well, despite all the problems at the lower end of the market?
Sales of homes priced $500,000 and higher were up 11.7 percent so far this year.
How long will that continue? Rates for jumbo mortgages (currently greater than $417K) and Alt-A loans have risen dramatically in recent weeks, while other rates have dropped, Bankrate reports.
Investors now believe that stated-income borrowers are going to default on their jumbo loans in bigger than previously expected numbers. So they have virtually stopped buying Alt-A and especially jumbo Alt-A mortgages. When lenders can’t sell the loans, they stop offering them to borrowers — or they ration them by jacking up the rates. That’s what happened.
But why are jumbo-mortgage customers being penalized for the actions of the no-doc-loan crowd?
When jumbo mortgages are securitized, the loan pools contain a mixture of mortgages in which borrowers documented their incomes along with mortgages in which borrowers merely stated their incomes, without providing documentation. In other words, they mingle jumbo and Alt-A.
It’s not hard to imagine an effort to unbundle those two loan classes, but don’t hold your breath.