While there are mortgage insurers that would take on the risk, none of the banks that buy jumbo loans from Alamo, California-based RPM accept their backing, he said.
Weekly applications to refinance mortgages slumped 71 percent from a 2013 high as the average rate offered on a typical 30-year mortgage rose to 4.93 percent in the week ended Sept. 6, from a record low 3.57 percent in December, according to Mortgage Bankers Association data. Home-loan applications for purchases have declined 14 percent since the start of May when interest rates surged. For 30-year jumbos, borrowing costs have risen to 4.75 percent from this year’s low of 3.87 percent in May, Bankrate.com data show.
Embrace Ideas
With rates rising it’s an especially good time for lenders to embrace a new idea, according to Rich Bennion, an executive vice president at HomeStreet Bank.
“With the sharp drop-off in volumes because of refinancing slowing to almost a stop over the last two or three months, it becomes all the more important to do everything we can to drum up more business,” Bennion said.
Sponholtz and Riccitelli see their timing as fortuitous.
“We might be the only ones active in the market for the next six months or year but we’re pretty sure we’re going to get formidable competition,” said co-CEO Sponholtz.