Conforming Jumbo and Mortgage Insurance in California

One of the changes in the stimulus bill was to raise the "Conforming Jumbo", loans greater than the conforming limit but still eligible for purchase by the GSE's, loan limits back to $729,750. From the previous LTV charts I've posted I've tried to define what is going on in the space between conforming and the jumbo conforming loan limits. I think the effect of the limits being raised back to $729,750 will be even more muted than it was last year. The reason why is that private mortgage insurance is increasingly becoming harder and harder to find in California for the conforming jumbo space.

Here is a summary of the private mortgage insurers I looked at..

• MGIC - Has a maximum loan amount of $650,000 for California. Will only underwrite mortgage insurance for LTV's <= 85% for those jumbo conforming loans.
• Radian - No Conforming Jumbos allowed at all. No Condos, Attached PUDs or second homes allowed for any product. 720 fico minimum required. They basically will only do 10% down conforming full doc files now.
• PMI - No Conforming Jumbos allowed in distressed markets. California is on their distressed market list.
• Genworth - No Conforming Jumbos allowed in distressed markets. California is on their distressed market list.

The only low down option for borrowers seems to be FHA. But FHA underwriting is stricter and FHA insurance is expensive. The front end ratio will stop most deals. There are other factors like how they calculate income which would disallow even more borrowers. Then of course is the minimum property requirements that must be met in order for the property to qualify for a FHA loan. Needless to say I don't think jumbo conforming loans will have much of an effect on this upcoming buying season.