Chase, Wells set early date for jumbo loan closings

By Adam Pincus | October 08, 2008 03:45PM

Home buyers using two of the nation’s top lenders are losing a mortgage sweetener a month early, following a decision by two large banks to alter some loan deadlines.

JPMorgan Chase and Wells Fargo have moved up by four weeks to December 1 the deadline for borrowers to close on jumbo conforming loans, thereby limiting lending options available to already pinched home buyers, in high-priced areas such as New York City.

Chase and Wells Fargo announced the decision about a month ago, according to three brokers. The two lenders did not respond to requests for comment.

The move affects buyers of homes and apartments between about $1 million and $3 million seeking a loan in the jumbo category, which is between $417,000 and $729,750.

In March, the federal government raised the upper limit for jumbo loans from $417,000 to as high as $729,750 in certain areas including New York City in order to stimulate home sales.

The increased limit, which remains in effect until December 31 for most lenders and will then likely drop to $625,000, was part of a national economic stimulus package signed in February by President George Bush, allowing banks to sell larger loans to Fannie Mae and Freddie Mac, thereby freeing up the lenders’ capital.

Out of the 216 mortgages published on the city’s Department of Finance Web site over the past week, Chase wrote 31 mortgages and JPMorgan wrote 40, according to a count by The Real Deal. Sixteen of Chase’s mortgages and 12 of JPMorgan’s were between $417,000 and $729,750, the records showed, making them eligible for the jumbo conforming loan.

The change does not make it impossible for home buyers to get the large mortgages, but it does make them more costly, brokers said.

Melissa Cohn, president of Manhattan Mortgage Company, said the shorter time was not scuttling deals. 

Mortgage broker Thomas Wiggin, president of Thomas Funding Group, said the earlier date set by the banks would impact buyers closing on deals over the duration of the year, who make a late decision to seek a larger mortgage.

“If at the last second [buyers] want to close under higher numbers it will be a problem and they will have to find another lender to do the deal,” he said.

Wiggin added that he believed the banks moved the date up to be sure the loans were completed by December 31 so that they could be sold to Fannie Mae or Freddie Mac and not remain as loans on the banks’ balance sheets.

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