SAN FRANCISCO (KCBS) -- One of the most important types of mortgages for the Bay Area should soon be easier to obtain. Freddie Mac is stepping up to buy what is now being called "conforming jumbo loans” from a handful of U.S. lenders.
People in the Bay Area are probably familiar with jumbo loans. They used to be mortgages over $417,000. The President's economic stimulus plan raised that ceiling to nearly $730,000, but many of those loans aren't being approved.
Haas School of Business Professor Jim Wilcox says lenders typically make some of their money may making a loan, then turning around and selling it to Freddie Mac or Fanny Mae.
"What this is really going to do is give some certainty to those lenders. They can now know that if they make those good loans they can then pass those on to those agencies," said Wilcox.
For now, Freddie Mac will buy what's being called "conforming jumbos," which are loans that fall between the old cap and the new one. While this won't reverse all of the country's real estate troubles, Wilcox says it will help especially here in California where property prices are higher than the rest of the country.
For now, Freddie Mac will buy mortgages from the nation's four top lenders, Washington Mutual, Wells Fargo, Citigroup and JPMorgan Chase.
(MGO)
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KCBS' Susan Leigh Taylor reports
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