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More Jumbo Product Hits Market

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With next month being the last month that temporarily higher agency limits will be in effect, a relatively new wholesale lender is helping to expand jumbo options.

The maximum conforming loan limit will fall to $625,500 on Oct. 1 from the temporary limit of $729,750. The same goes for mortgages insured by the Federal Housing Administration.

In many areas, the maximum limit will be even lower.

TMS Funding announced Tuesday the launch of a jumbo wholesale program.

The new “flexible” product is available for both purchase and refinance transactions, according to the Milford, Conn.-based company.

Debt-to-income ratios up to 45 percent are allowed.

The maximum loan-to-value is 90 percent on loans up to $625,000. The LTV is limited to 80 percent up to $1 million.

On second homes the LTV drops to 80 percent up to $650,000 and 75 percent for loans as high as $1 million.

TMS, which was launched by Total Mortgage Services in December 2009, said the program allows for loan amounts up to $2 million.

A spokesman clarified that the LTV on a $2 million loan is 70 percent, and it drops to 65 percent for a second home.

Hybrid options include rates that are fixed for five, seven or 10 years then convert to an adjustable-rate mortgage based on the London Interbank Offered Rate — or LIBOR.

Mortgage brokers in 20 states will have access to the new program.

New Penn Financial LLC unveiled in July loans up to $2 million for borrowers who don’t qualify for agency loans.

Fairway Independent Mortgage Corp. said in April that it planned to take advantage of the upcoming expiration of the super-conforming loan limit and hoped to roll out a non-conforming product in the third quarter.

The cost of a jumbo mortgage was 65 basis points higher than a comparable conforming loan as of last week, according to the U.S. Mortgage Market Index report from Mortech Inc. and Mortgage Daily. The jumbo-conforming spread had been as low as 41 BPS last month.

The Mortgage Bankers Association reports that jumbo mortgages accounted for around 4 percent of first-quarter originations, which the trade group separately estimated at $302 billion. That put first-quarter jumbo production in the neighborhood of $12 billion — an annual pace of nearly $50 billion.

Mortgage insurer Radian Guaranty Inc. said in June that it relaxed its guidelines on non-agency jumbo mortgages.

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