(PRWEB) August 29, 2012
Tobias Nergarden issued some observations about the effect of jumbo loans on the housing recovery today, and his opinion is that this will help home sellers and generate real estate leads as well as buyers, such as those looking for beach front vacation rentals to invest in.
The Wall Street Journal reports on the increasing numbers of jumbo loans in the real estate market, which a strong sign of recovery, even though the market itself is only recovery slowly. These jumbo loans are loans that are not covered by the federal government, and therefore have a higher interest rate. In spite of that, these types of loans are making up 15% of all mortgages for Bank of America. Other lenders, like Wells Fargo and Citigroup are also reporting a rise in jumbo loans. This is considered a strong sign of recovery because it means that the current strict lending standards may be relaxed and jumbo loans are usually used in high end luxury homes, which are selling more now than they have in the last few years.
Bank of America is one of the largest corporations in the world, and is involved in regular banking as well as investment banking. A large component of their business involves mortgage lending, as they are the largest lender in the United States, controlling roughly 25% of all loans. This happened after they acquired Countrywide Financial in 2007, which had previously been a major player in the mortgage business. Bank of America received a large amount of Federal bailout money from the TARP program, but in 2009, announced that it had all been paid back.
Wells Fargo is a large financial institution in the United States and is heavily invested in the mortgage business, with nearly a quarter of home loans under their purview. After the 2008 financial crisis, Wells Fargo was the recipient of money from Federal government bailouts, and afterward, paid a large amount of dividends to the U.S Treasury and taxpayers.
Citigroup began in 1812 in New York as Citicorp, a bank set up for New York merchants. Since then, it has merged with other organizations, such as Travelers group, to become a major financial institution on a global scale. Citigroup was heavily damaged by the subprime mortgage crisis and required a substantial bailout from the Federal government. Because of a prominent position in European finance, it has also suffered from the European debt crisis. Because of the bailouts, a large portion of the company is owned by the U.S. government.
Real Estate Marketing Insider today commented on the rise in jumbo loans, which are a sign that the real estate market will eventually see a bigger recovery than it has to this point.
About Real Estate Marketing Insider:
Real Estate Marketing Insider is a publication based out of Las Jolla, California. REMI’s primary objective is to provide a wealth of strategies, tips and analysis for real estate professionals everywhere.