[pmacdaddy]

Originally Posted by wiphan

Alot of what you said is true, however some is not. The Fed did not drop the Fed Funds rate, which it has raised 17 times, it dropped the discount rate .5%today temporarily which allows banks to borrower $, not consumers. This will have no direct affect on the consumer yet, however the stock market will like this today

Non-conforming or Jumbo loans(over $417k) are sold separately and Fannie and Freddie do not buy these types of loans. The biggest problem in the industry is companies that offered option ARMs or negative amortization loans. These loans people did not pay the all of the interest on the loan, they actually add principal to the loan. Many companies like Countrywide and WAMU offered these loans and when home prices slipped or fell, consumers are finding themselves owing more than the home is worth. The home they bought 1 year ago for $500k, is now worth $450k and they owe $510-525k. Imagine that a lot of customers will just let the house go into foreclosure. I personally work in the mortgage industry for another more reputable company and we never offered these types of loans and have not been affected by these problems. The other issue with Non-conforming or Jumbo loans is that investors currently are scared to buy these loans due to uncertainty of their performance. This has driven the price/interest rates up.

Working with a educated mortgage professional you can still find great advice and low interest rates. Currently I am structuring blended Jumbo loans with 2 mortgages and both mortgages on 30 year fixed rates around 6.75%, this is a way around the increases in Jumbo loan pricing.
I hope that helps clarify things

Just curious. That is a conforming fixed loan and second mortgage with 30 year fixed amortization? Had not heard of that. What is rate on second mortgage?