One of the biggest issues facing the Manhattan Beach-Beach Cities real estate market has been the lack of jumbo loans at reasonable rates. Most lenders who were making Jumbos were doing them at rates that were really high compared to the rest of the market... bouncing between 7.5%-8.5%. As our Beach Cities real estate market, even with current price declines, remains one of the most expensive in the state the lack of Jumbo financing has been troublesome.

The rumors started last December... lenders were going to begin funding Jumbo loans in the spring. In January there was a little movement from some of the big boys but rates were still fairly high compared to conforming rates. A few major lenders began offering loans at 6%-6.5% which was looking very good. Now it appears that Bank of America has stepped up and is offering Jumbo loans ($729,750+) at very competitive... actually dirt cheap... rates!

I called Bill Nazur at Bank of America to see what was happening... and the rumors are true. Bill has been making loans since the 80's and knows what's what when talking mortgages. The basics are that BofA is making jumbo loans $730,000 and up. They are making loans over $1million which had been the maximum for many lenders. Depending on your credit you can get one with 20% down at an interest rate between 5.625%-5.875% that is fixed for 30 years.... did I say dirt cheap rates! If you are looking at a sale price of $1,000,000 or less with 20% down your FICO has to at least 680. With a FICO of 720 you can purchase a home up to a price of $1.5 with 20% down. Needless to say Bill is swamped with clients right now but he always has time to answer questions... so shoot him an email and he can give you more information on their program.

He recently qualified on of my clients for a $1.5 price with 20% down and and a fixed rate between 5.625%- $5.85 depending on when they lock in the interest rate. Bill told me that BofA has been doing these loans for some time. According to Inside Mortgage Finance they were the largest originator of jumbo loans in the 4th quarter of 2008. They are only making the loans via Bank of America directly. That means that you have to talk to someone at BofA to get the information on these loans. The bank is keeping these loans on an in-house basis in the bank's portfolio. No marginal borrowers allowed... you have to have good credit and reserves to get on of these loans.

Now that BofA has publicized their program I'm guessing you will see more lenders in-housing similar loans at equally competetive rates. This is good news for Manhattan Beach-Beach Cities homeowners who need to refinance a large loan and buyers who would rather not put 50% down on a home under $2 million.

UPDATE:  Bank of America will make loans with 20% down on homes priced to $1.5 million.  On homes priced from $1.5 million -$3. million you will need 30% down.  The higher your FICO sclore the less you will need in reserves.