New money is about to flow into a part of the real estate market that has been squeezed hard by the credit crisis: mortgages too large to be purchased or backed by Fannie Mae, Freddie Mac or the Federal Housing Administration.
Higher-cost areas throughout the country traditionally have depended on the ready availability of “jumbo” mortgages to finance houses. Such neighborhoods are heavily concentrated in California, portions of Florida and the Northeast, including the Washington (Boston) region. With the collapse last year of the private mortgage bond market on Wall Street, home buyers, builders and refinancers who relied on jumbo financing were left with few sources — except with punitively high interest rates and huge down payments.
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