When Jumbos roamed the earth — The San Diego Home Blog
I used to love to read The Far Side comic strip written by Gary Larson. One of my favorites was titled The Real Reason Dinosaurs Disappeared and it showed dinosaurs smoking cigarettes. Well dinosaurs no longer roam the earth, but jumbo loans still do.
Let's define what we mean by jumbo. We are referring to "non-conforming" loans loans that do not conform to Fannie Mae and Freddie Macs loan limits. Those limits right now are (in San Diego county) $697,500. So we are referring to loans above that amount. There are a number of reasons why we do not see too many these days and why Kris did not pull up any in her numbers. Let take a quick look at history in this market, how we got to where we are, and where are we going.
I think it is safe to say that the jumbo market, in California was first serviced by the Savings and Loan industry. The reason I state this is that back in the 80s, when real estate values increased far beyond Fannie/Freddie loan amounts, the S&Ls did most of the lending. A million dollar loan was usually funded by Home Savings, Home Federal, Great American, Great Western, or American Savings. They normally required 20 to 25% down and of course most of these loans were fully documented for income and assets. There were some stated income loans then they were normally known as qualsâ however, they were not the norm. They were scrutinized for common sense, self-employed people only, and the people who did receive them had the assets to support the income that was on the loan application. Then along came the Savings and Loan Crisis where most of the larger S&Ls went under. I don't have a PHD in S&L history, but most of the S&Ls that went under, went under for two reasons:
...