A Big Boost for Buyers Seeking Jumbo Loans

Major banks are now heading into the jumbo mortgage market, originating big loans at affordable rates for their own investment portfolios, according to reports by the Washington Post and Nation's Building News. Bank of America, the country’s largest mortgage lender, is rolling out a large program to finance jumbo loans between roughly $730,000 and $1.5 million, with fixed 30-year rates starting in the upper 5% range. The loans will be available through the bank’s retail network and also through its Countrywide Home Loans subsidiary. With little fanfare, other financial institutions have become more active in this segment of the mortgage market. For example, ING Group, an Amsterdam-based banking and insurance conglomerate, offers jumbos as large as $2 million through its online ING Direct unit. The minimum downpayment for an ING Direct jumbo is 25%; Bank of America quotes a minimum 20%. ING’s jumbos typically are “5/1” and “7/1” hybrids with a fixed interest rate for the first five or seven years, followed by an adjustable rate tied to the Libor index for the balance of the 30-year term. Current rates start around 5%. Bank of America’s new program requires hefty liquid resources — six months of principal, interest, property tax and insurance payments in reserve — plus fully documented income, solid credit scores and a full appraisal.