NexBank begins originating super jumbo loans
In an environment where the perfect mortgage product is difficult to come by, one North Texas lender is shaping a new kind of jumbo loan. NexBank said Thursday borrowers can now receive jumbo mortgages of more than $2 million. NexBank provided jumbo products in the past, originating $45 million in jumbos in 2010, but said this "renewed" product is something the market needs and seeks. "Oftentimes their loans need special consideration when it comes to income documentation, loan-to-value or other underwriting considerations," said Jed Meaux, a vice president and head of NexBank's Mortgage Group. "We are confident there is unmet demand for jumbo loans in today’s market, and that the jumbo mortgage customer is seeking funding sources that are driven by common-sense underwriting." NexBank performs all of the underwriting on these super-jumbo loans, as they are often called, as well as takes care of the processing. Mike Rossi, executive vice president of NexBank, said his firm is willing and able to fill that void left by the housing crisis. Jumbo loans are defined as being outside the conforming loan limits set by the government-sponsored enterprises Fannie Mae and Freddie Mac. Jumbo lending sparked in 2003 and 2004, due in part to home price appreciation. The conforming loan limit at that time was $322,700. Once the housing crisis struck, the GSEs increased the loan limits to $417,000 or $729,750 in high cost areas. Jumbo origination subsequently dropped from $650 billion in 2003 to $87 billion in 2010, a difference of 87.4%. Jumbo lending picked up slightly in the years following the downfall, however, still remains at low levels. Lenders feel more confident getting back into this market because they can finance these loans from their balance sheet as opposed to a line of credit. The Federal Housing Finance Agency is expected to reduce conforming loan limits on mortgages guaranteed by Fannie Mae and Freddie Mac this October. "Nationwide, jumbo mortgage originations were down an estimated 70% in 2008 over prior years — not due to lack of demand, but rather a lack of supply," Rossi said. "Mortgage solutions have quickly become a core competency for us during the past years, and lending money directly from our balance sheet for jumbo loans just makes sense." Write to Christine Ricciardi. Follow her on Twitter @HWnewbieCR.