Credit crunch? Mortgages still available
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That trend might reverse soon, courtesy of the federal government. James Lockhart heads the Federal Housing Finance Agency, which now oversees Fannie and Freddie. He told Congress this week that the mortgage finance companies' mission to support affordable housing "had been impaired," partly because of the added fees that had made mortgages more expensive.

In a sign that he wants to rescind some of those fees, Lockhart told the Senate Banking Committee that he has instructed the new heads of Fannie and Freddie "to examine the underwriting standards and pricing. They have begun to do so, and I expect any changes to reflect both safe and sound business strategy and attentiveness to the Enterprise's mission."

Jumbos are scarce
It's not all good news. The marketplace for jumbo mortgages has been in disarray for more than a year now, and it isn't getting better. Jumbo rates are higher than rates on conforming loans (mortgages of $417,000 or less).

"Jumbos are harder to get. To me, that market is scarce," says Bob Walters, chief economist for Quicken Loans. If there are any jumbo deals to be had, they come from banks and thrifts that keep the loans instead of selling them on the moribund jumbo secondary market.

"Jumbo still exists, but in a horrifying format," says Dick Lepre, senior loan consultant with Residential Pacific Mortgage in San Francisco. A few lenders offer 30-year, fixed-rate jumbos at 8 percent or more. That rate is too high for today's borrowers. For jumbos, "the most common thing that we do is a 5/1" adjustable-rate mortgage, Lepre says.

Early this week, a 5/1 jumbo ARM was available from Lepre at a starting rate of 6.375 percent, with a one-year prepayment penalty. To qualify, the borrower had to have good credit and "fairly strong reserves" -- as much as 12 months' worth of house payments in readily available savings. That loan was from Union Bank of California, a regional bank based in Los Angeles.

At the same time, Citi was charging more than 9 percent on a 5/1 jumbo ARM -- plus more than 2 discount points. Chase was charging high rates, too. "Citi and Chase just don't have any appetite for jumbo loans right now," Sahnger says.

Lepre and Sahnger are brokers, and they say brokers are the best source for jumbo loans because they have access to the reduced number of lenders that are offering them at affordable rates.