In the latest update on our series about a post-Fannie/Freddie lending world, we strongly recommend this post from NakedCapitalism: GSE 2.0 Scare Tactics: False Claim That No Government Guarantee = No 30yr Mortgage. Below is an excerpt about rates for non-Fannie/Freddie (aka jumbo) mortgages, and this follows our Part 1 and Part 2 discussions of how non-Fannie/Freddie 30yr fixed deals are being made right now today, so they’re unlikely to disappear in the short to medium term:
The Times is running with the biggest and best threat the fans of this plan can come up with: that the US will lose its much-loved thirty year mortgage without it. We have a new version of TARP type extortion tactics, that of Bill Gross claiming that investors would demand three percent more to invest in mortgages without government guarantees. That’s patently untrue even now. Jumbo mortgages, which were never GSE guaranteed, are now being done at a 75 basis point (3/4%) premium to Fannie and Freddie mortgages (the premium before the crisis was 25 to 40 basis points).