Already on life support, the housing market endured another body blow this weekend when the cap on mortgages eligible for federal loans was reduced. Only loans of $625,500 or less, compared to the previous limit of $729,750 for the country’s most expensive markets, will be eligible for the lower down payments and interest rates promised by government loans. Those jumbo loans that exceed the limit will become more expensive.

Just 2 to 4 percent of the market will be impacted by the change, according to CNN, or about $30 billion of the $600 billion worth of loans Fannie Mae and Freddie Mac acquired in 2010. [more]

JPMorgan Chase is launching a program later this summer in which they will
start buying jumbo loans from other mortgage lenders and specialists.
This program comes on the heels of a similar endeavor by Citigroup in
which they also began purchasing jumbo loans from various mortgage
specialists such as Guardhill Financial and Equity Now. Michael
Moskowitz, president of Equity Now, says the move by JP Morgan is a step
in the right direction. “It won’t be a big boom, but business will
increase,” he said. But Moskowitz said this time around, restrictions
on jumbo loans will be stricter, including income checks on all jumbo
loan borrowers before they are approved. [more]

From the June issue: Stung by a wave of condominium defaults and
the collapse of the credit market for jumbo loans, some real estate
brokers are channeling their energies into a different area: affordable
housing developments with government-backed financing for first-time
buyers. For some brokers these offer a stable alternative to
market-rate condominiums and co-ops. In recent years, firms like
Halstead Property and Fillmore Real Estate have expanded their presence
in affordable housing or mixed-income projects. And, in recent months,
as the recession has made market-rate sales more difficult, competition
among brokers has intensified because more buyers are turning to
affordable units. “We are seeing people who will come to our sales
showrooms now who can’t quite afford the market-rate units,” said
Stephen Kliegerman, executive director of development marketing at
Halstead Property. “These are affordable housing [units] but they are
open to free-market [buyers] under restricted income [guidelines].” [more]