Good news on the mortgage front: The market for securitized loans is back.
And not just for loans backed by Fannie Mae, Freddie Mac or FHA. A small $235-million bundle of jumbo loans, which are too big for Fannie Mae, attracted plenty of interest from investors and a top credit rating from Moody’s. The underlying loans required borrowers to thoroughly document income and assets
and to have high credit scores, but many are interest-only for the first five years.
It’s a critical first step in rebuilding the housing and mortgage markets. As long as Fannie Mae, Freddie Mac and FHA buy and guarantee conventional loans,
the need for a big private market for smaller mortgages isn’t critical. But without a way
to offload outsize mortgages, banks will be loath to tie up their capital in them. That’s brought the high priced slice of the housing market to a near standstill.