Growing mortgage crisis spreads to jumbo loans

The Seattle Times reports:

Borrowers with good credit scores, good jobs and a down payment still have ready access to 30-year "conforming" loans — those funded through banks and mortgage brokerages by Fannie Mae and Freddie Mac, the giant federally chartered companies that fund the bulk of the nation's mortgages.

But Fannie and Freddie cap their loans at $417,000, which means that banks and mortgage companies must tap other sources, such as mortgage-backed securities, for jumbo funds.

In recent weeks a skittish Wall Street has loudly signaled its unwillingness to invest in these securities.

"Funding sources have dried up for all loan products except for conforming loan product," explains Erik Hand, president of Bellevue-based Response Mortgage. "Anything outside of those product types and your options are limited because there's no investor appetite for those loans anymore."

You might say the demand for mortgage backed securities isn't what it was 3 months ago.