Jumbo borrowers who defaulted on their mortgages in the last few years have found it virtually impossible to buy another home. Many are self-employed borrowers whose incomes have recovered since the recession ended, and some are borrowers who walked away from underwater mortgages but now want to take advantage of recent home-price gains. The few lenders willing to do business with these borrowers tend to require long waiting periods, higher down payments, and higher interest rates.
Private jumbo lenders tend to focus on borrowers with the highest credit scores, and they generally adhere to Fannie Mae and Freddie Mac guidelines requiring strategic defaults to wait seven years to obtain another mortgage. However, private lenders may pull back on these waiting periods in the coming year, especially as the FHA now allows certain borrowers to obtain new mortgages within one year of foreclosure. Smaller lenders, meanwhile, may be willing to work with borrowers whose financial problems were out of their control and who have since strengthened their credit profiles.