At the Charlotte, North Carolina-based bank, nonconforming mortgage originations were 37 percent of overall loans made during the first quarter compared with 22 percent a year earlier, according to the firm.
RPM Mortgage this year began offering new jumbo adjustable- rate mortgages with initial low rates. One of their loan products provides a fixed rate for five years at a maximum of 2.63 percent, and then resets once during the next five years to no more than 4.63 percent, Lepre said.
Jumbo Defaults
Jumbo originations are still lower than they were before the financial crisis. A decade ago, jumbo ARMs helped fuel the housing bubble by letting buyers qualify for homes they could only afford at the low rates before they reset.
When home prices stopped climbing in mid-2006, both jumbo and conventional ARM borrowers began defaulting in higher numbers, contributing to the collapse of the mortgage market that in turn led to the most severe financial crisis in decades.
Today, demand for jumbos is growing as borrowers resume buying second homes or investment properties, according to Chase’s Corydon. Banks are often fighting for loans in the $1 million to $2 million range, said Mike McPartland, head of lending for Citigroup Inc.’s private bank.
“If in the past, I was competing with two private banks, now it feels like I’m competing with two private banks and two regional lenders for that $2 million mortgage,” said McPartland, whose clients generally have at least $25 million in net worth. “The benefit to working with a bank that knows you is we don’t treat a mortgage like an isolated financial transaction.”