Fannie and Freddie aren't as interested in post-closing reserves, but with a jumbo mortgage (over Fannie and Freddie's loan limit of $417K), you'll need plenty of money left after you close. That's just how it is nowadays.
Some jumbo mortgages require as much as 18 months of the monthly payment be held in reserves after the closing. Post-closing reserves isn't money that is spent, or even drawn on in any way, it's money that is shown to the underwriter in order to prove that a borrower has enough cash after the closing to pay the payment even in the event of income loss. This reserve could be made up of IRA accounts, 401K accounts, cash value of life insurance policies, CDs, checking, savings, pretty much anything that is liquid. Equity in the property doesn't count, nor do non-liquid assets such as jewelry, cars and boats.
At a minimum, jumbo mortgages are requiring 12 months of the payment in reserves in order to qualify. In this mortgage market, cash is king.
Showing posts with label jumbo. Show all posts
Showing posts with label jumbo. Show all posts
Sunday, October 14, 2007
Saturday, August 04, 2007
No Longer a Mortgage Broker
Now that I work for JPMorgan Chase Bank, N.A. I'm no longer a mortgage broker.
I just made the move a week ago, so I've been watching the news with interest as American Home Mortgage locks out it's employees (heard they did that, don't know for sure) and then shuts down completely laying off 7000 people.
Also Greenpoint Mortgage has stopped originating Jumbo (loans over the conforming limit of $417K) ARMS. That is a major part of my book of business here in Manhattan. Wells Fargo slashes it's Alt A programs, as does Wachovia. Wells Fargo's Alt A cutback only affects Mortgage Brokers, while Wachovia ditches Alt A lending altogether. Alt A mortgages are those in which the borrower falls between prime and subprime, but the borrower are closer to Prime borrowers, so this really hurts the homebuyer, who might be a small businessman, shop owners and the like.
Accredited's clean bill of health is pending.
Top brass at Bear Stearns says the secondary debt market is the most volatile it has been in 22 years. While Indymac's Chief Executive emailed people saying the mortgage-backed bond market is "very panicked and illiquid", driving Indymac's stock price down.
This next few months are going to be a roller coaster ride for us in the mortgage business, especially those of us on the front lines as we find out hour by hour what types of loans we can originate and what types are no longer available.
I just made the move a week ago, so I've been watching the news with interest as American Home Mortgage locks out it's employees (heard they did that, don't know for sure) and then shuts down completely laying off 7000 people.
Also Greenpoint Mortgage has stopped originating Jumbo (loans over the conforming limit of $417K) ARMS. That is a major part of my book of business here in Manhattan. Wells Fargo slashes it's Alt A programs, as does Wachovia. Wells Fargo's Alt A cutback only affects Mortgage Brokers, while Wachovia ditches Alt A lending altogether. Alt A mortgages are those in which the borrower falls between prime and subprime, but the borrower are closer to Prime borrowers, so this really hurts the homebuyer, who might be a small businessman, shop owners and the like.
Accredited's clean bill of health is pending.
Top brass at Bear Stearns says the secondary debt market is the most volatile it has been in 22 years. While Indymac's Chief Executive emailed people saying the mortgage-backed bond market is "very panicked and illiquid", driving Indymac's stock price down.
This next few months are going to be a roller coaster ride for us in the mortgage business, especially those of us on the front lines as we find out hour by hour what types of loans we can originate and what types are no longer available.
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