Jumbo product roll-outs persist despite higher conforming limits

Even though conforming loan limits increased approximately 18% for 2022, some mortgage lenders are adding or enhancing their jumbo product offerings.

Meanwhile, the Federal Housing Finance Agency is hiking fees on certain high-balance mortgages, along with second home loans, being sold to Fannie Mae and Freddie Mac. That move is likely to have lenders consider a private-label securitization option for those loans, if they can get better secondary market pricing.

However, the Community Home Lenders Association is asking the regulator to at least slow down implementation by extending the start date to July 1 from April 1. Furthermore, to only apply the fee hikes for mortgages whose initial balances are above 120% of the conventional loan limit, which would be $776,640, and exempt first time home buyers who earn less than150% of median income from those loan level price adjustments.

“In fact, a significant number of so-called high balance loan areas have a median home price in excess of [the] conventional GSE limit of $647,200,” the organization said in a letter sent to FHFA Acting Director Sandra Thompson. “Therefore, the fee hike will negatively impact a significant number of homes below the median income in the local area.”

The 2022 conforming limit in high balance areas is $970,800. But during 2021, jumbo mortgage credit availability increased 34%, while the overall market increased only 3%, the Mortgage Bankers Association noted.

Tomo, a fintech company which started up in October 2020, just added jumbo mortgages to its product portfolio. Last June, the company, founded by Zillow’s former Vice President of its Premier Agent business, Carey Armstrong, and former President of media and marketplace, Greg Schwartz, raised $70 million in seed funding.

It started doing business in Washington and Texas, and just added Florida, Colorado and Connecticut to the areas it services.

Tomo’s jumbo product is available in 30-year and 15-year iterations and the loan limit is $3 million; the loan-to-value ratios go up to 89.99% and the back-end debt-to-income ratio is 43%. It meets the qualified mortgage rule.

By adding jumbo, Tomo looks to support real estate agents so they can assist their customers to buy a home no matter what product they need. “And while conforming limits are higher than ever, they still don’t cover a large proportion of buyers in our geographies,” said Armstrong, who is Tomo’s chief revenue officer. “On top of that, it’s important to us as a purchase-only lender to have a broad product portfolio.”

More established players are also upping their jumbo game. Deephaven Mortgage, primarily a non-qualified mortgage lender, is rolling out a new jumbo prime loan that is QM compliant to both its correspondent originators and mortgage brokers. Last March, the company brought jumbo products to its wholesale business.

Loan amounts will go up to $3 million for primary residences, second homes and investment properties such as two- to four-unit homes. The maximum LTV is up to 89.99% for loans up to $2 million, and 80% for mortgages above that amount. Private mortgage insurance is not required for the higher LTV loans.

At the start of the year, Homebridge came out with a new jumbo wholesale product. Homebridge Jumbo Preferred has a $2.5 million maximum, with LTVs up to 90% and no mortgage insurance required. It is available on purchases and rate-and-term refis on primary, secondary and investment properties. It also complies with the QM-rule.

United Wholesale Mortgage has added Prime Jumbo Max to its roster of nonconforming mortgage loans. Loan limits are $2.5 million with an 80% LTV. This product is eligible for primary and second homes for purchases and rate-and-term and cash-out refinances.

At the same time, UWM increased the LTV for its Prime Jumbo Released product to 89.99% from 80%. Its other offerings include Prime Jumbo, Prime Jumbo ARMs and Prime Jumbo Interest Only. It returned to prime jumbo lending last March, after it had hit pause because of the pandemic-related disruptions to the secondary market.

UWM is offering borrowers up to a $600 credit for appraisals for all primary purchase loans, including jumbos, through March 31.

“Partnering with an independent mortgage broker continues to be the best choice for real estate agents and consumers, and we’re adding one more reason why with the no-cost appraisal,” Mat Ishbia, president and CEO said in a press release. “This tool will save homebuyers a lot of money and make the home buying experience better for consumers and real estate agents alike.”


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