How tight is credit?

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Good morning. We start the week with a question: how bad is the Jumbo mortgage squeeze? We know the rates on Jumbo mortgage loans ($417K and above) spiked this month, but what’s the fallout? What’s the damage to the market? How weak will August sales be? For guidance, we’ll throw out a bunch of links and insights:

Today’s LATimes reports the mortgage market turmoil is causing some deals to fall out of escrow: ‘Although it’s hard to track how many pending sales fall out of escrow, real estate and mortgage experts say anecdotal evidence suggests that the current turmoil in the mortgage markets is causing a number of prospective deals to be abandoned.’

Over the weekend, The New York Times reported, ‘The market for large mortgages has suddenly dried up.’ The NYTimes said the ‘spread’ between conventional 30-year mortgages and Jumbos has widened from less than a quarter of a percentage point to more than two-thirds of a point, seriously harming the California market: ‘’In California, it has shut down the purchase market,’ said Jeff Jaye, a mortgage broker in the Bay area. ‘It has shut down the refi market.’’

Bearish realtor Leo Nordine, noting the spike in Jumbo rates, told us Friday, ‘That means people trying to buy million-dollar houses are in trouble now. It’s just going to be a disaster.... The high end is gonna die now.’

There have been less bearish voices. Inman News columnist Jack Guttentag (sorry, no link) wrote last week, ‘there is no shortage of money for jumbo loans. The shortage is in the higher-risk niches...’

And Beverly Hills mortgage broker Mark Cohen told us Friday, ‘People with good credit who are putting down five to ten percent and can document things are getting good loans.’

Your thoughts? Insights? Comments? Email story tips to lalandblog@yahoo.com