WE’RE HEARING the jumbo interest-only home loan popular with high-net-worth borrowers is still being made for now, even though
Tom Wind, executive vice president of lending at jumbo lender EverBank, told us at the Mortgage Bankers Association’s recent National Secondary Market Conference in New York that
While interest-only home loans proved disastrous as an affordability product for lower-income borrowers and in that market are largely extinct, jumbo interest-only loans made to the affluent pre- and post-downturn persist and still have a presence in the new non-agency jumbo securitization market.
As a Kroll presale report on a recent deal by Sequoia Mortgage Trust (
Even though it has hurt more low- to moderate-income borrowers, some affluent customers still feel comfortable with the jumbo interest-only product because they have the income to support it and use it for tax-break reasons.
A lot of the flexible home loan products extend more broadly to borrowers between 2005 and 2007 originally were used more narrowly in the high-net-worth borrower market and many still argue today that they are still appropriate to use in that market.
Wind indicated it is not clear whether the qualified mortgage rule will end or otherwise affect the Jacksonville, Fla.-based company’s originations of jumbo interest-only loans.
Indeed, Consumer Financial Protection Bureau director Richard Cordray has said
But with Wind making a note of the regulatory change, it is clear EverBank—which holds some of its jumbo home loan product in portfolio
When asked whether the qualified mortgage rules has affected demand for the jumbo interest-only loans as borrowers anticipate a possible end to their availability, Wind indicated it is possible but not apparent so far.
Bonnie Sinnock is managing editor of National Mortgage News and editor of Origination News. She has been covering the mortgage industry since 1995.