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Tuesday, June 9, 2009

Jumbo Mortgage Activity Increasing

As this recovery begins, all eyes will be on the housing markets as a gauge for just how strong this return to growth will be.

Of particular note is the jumbo mortgage market which is now springing back to life.

A jumbo mortgage is a home loan with a lending amount above the industry-standard definition of conventional conforming loan limits. With some exceptions, this means an amount above $417,000. A loan in excess of $650,000 is typically referred to as a super jumbo mortgage.

Banks have now resumed underwriting wealthy clients in both of these categories. In fact jumbo activity seems to be brewing even with a limited secondary market for these large payback notes.

For instance, Bank of New York Mellon’s wealth management division reports a resurgence in its high-end lending activity. "We’ve seen significant growth," says Erin Gorman, their national director of sales. Through the end of May 2009, BNY Mellon's jumbo lending activities are up 32% by dollar volume compared to that same period in 2008. In the first quarter of 2009, BNY's average loan balance bounced by 23% compared to the first quarter of 2008.

Another example is found over at Coldwell Banker Residential Brokerage. In the Boston market alone 36 properties of $1 million and up went under contract in March. That figure nearly tripled in May, jumping to 105 mega residential deals.

Mellon's Gorman currently is observing that her competitors are indeed returning to the jumbo market as the economy recovers.  She notes that during the recession, "we earned a reputation as the go-to player in jumbo mortgages. And that puts us in a strong position as other lenders gingerly move back onto the field."

BNY Mellon (BK) is one of the 10 large banks announcing that they will begin repayment of their TARP bailout monies to the US Treasury.

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