Disappointment, frustration over ‘junior jumbos’

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Old conventional wisdom: The new ‘junior jumbo’ mortgages — in the $417,000 to $730,000 range — are going to lower interest rates, lure new buyers, and breathe new life into the California real estate market.

New conventional wisdom: The ‘junior jumbos’ are a major disappointment. They aren’t that cheap, they are hard to get, and they’re not helping very much.

The New York Times reports tonight: ‘ ... the effort to make it easier to get jumbo mortgages — loans over $417,000 — has yielded frustration and disillusionment. ... many prospective borrowers and their mortgage brokers say the new loans are either not available or the rates are far higher than they expected. Relief, they say, has been replaced by grief. The program ‘is so much of a failure that it’s really unbelievable,’ said Daniel M. Shlufman, president of the FCMC Mortgage Corporation in Clifton, N.J.

Numbers: A Santa Ana mortgage broker is quoted saying he can get a rate of 5.75% for a loan of $417,000; but if the loan is just a little bit higher — into ‘junior jumbo’ territory — rates jump to 6.99%.

Your thoughts? Comments? E-mail story tips to peter.viles@latimes.com.