JUMBO CHALLENGES

The Obama Administration’s housing stability plan does not address jumbo mortgages, giving borrowers with loans too big for Fannie Mae and Freddie Mac to buy few options if they want to reduce their monthly payments. Even homeowners with stable incomes, 20 percent equity and good credit cannot refinance in the current market, forcing some to tap into 401(k) plans or other investments to pay down mortgages if they hope to be eligible for a fixed-rate conforming loan. Some banks are also setting jumbo rates high to discourage borrowers, and realty professionals say some upscale communities could see home-price declines because borrowers can’t get a jumbo loan.

Source: Wall Street Journal (02/24/09) P. D1; Timiraos, Nick

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