JPMorgan Chase tightens requirements for jumbo loans in Manhattan
JPMorgan Chase Bloomberg reported Friday that jumbo loan terms for Manhattan cooperatives and condominiums were tightened due to declining buyer demand.
Chase announced that starting this week, jumbo loans would be capped at 70% of the selling price. The new standards apply to loans greater than $ 765,600 that are not guaranteed by Fannie Mae and Freddie Mac – which, according to the report, make up 95% of the Manhattan market.
JPMorgan’s new lending restrictions apply to all Manhattan homes, including resales and cooperatives, many of which are relatively affordable, older units that budget-conscious buyers turn to first.
A JPMorgan spokesperson confirmed that the new loan terms are due to “current economic conditions”.
Jonathan Miller, real estate appraiser and consultant at Miller Samuel Inc., told HousingWire that it was “unusual” for one of the New York boroughs to be singled out.
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“Manhattan is one of the most expensive real estate markets in the United States, and a large portion of the mortgage loan is huge,” he said. “However, the Manhattan market has been the slowest to recover because its residents are the most affluent and most mobile in the city. A large number were able to leave with a COVID lockdown. “
Miller added that the lack of a vaccine has deterred many from returning to Manhattan.
“That weakens the market as prices have come down,” he said. “Unlike compliant lenders, many jumbo loans are held in the portfolio and future economic conditions are currently fraught with uncertainty.”
Melissa Cohn, Mortgage Lender and Broker at William Raveis Mortgageadded that an influx of condominiums in New York City caused “a perfect storm”.
“Prices have fallen a greater percentage in New York City than anywhere else in the country,” said Cohn. “Chase and other lenders have decided to put down credit scores to protect themselves.”
Cohn added that many lenders are following similar paths during the pandemic: increasing maximum credit score requirements, lowering maximum loan amounts, needing more cash reserves, and even limiting or eliminating home equity loans
In March HousingWire asked, “Has non-QM just disappeared from the market?” Many of the largest lenders who specialize in lending to borrowers outside of qualifying mortgage lending ceased operations due to market uncertainty. The two main attractions were Angel Oak Mortgage Solutions and Citadel Servicewho stayed in the non-QM lending business as long as possible before finally saying goodbye.
Non-QM lending, however, made a comeback in May, when several companies that stopped non-QM lending back in March came back, including Sprout mortgage, GreenBox loansand Angel Oak.