Jumbo mortgage growth linked to new tax law.

Jumbo mortgages are hot, and part of the reason may be the new tax law.

Lenders say they are experiencing more interest on the part of affluent homeowners for refinancings that would increase the size of their loans.

"We're seeing a lot of demand for higher loan-to-value loans" from wealthy clients, said Richard Waterfield, chairman of Union Federal Savings Bank in Indianapolis. "These people want to get as large a loan as possible to maximize their tax deductions." Higher rates will be in effect next year on high-income households.

One source said, however, that the net effect of the new law would be to reduce the availability of deductions for the affluent, and that they might not benefit from larger mortgages.

Clamor for Big Loans

Depressed property values and strong demand for luxury homes are also factors in the clamor for jumbo loans.

In White Plains, N.Y., Donna Menton, vice president of Covino & Co., said business has been strong at her company, which specializes in large loans.

"There's a lot of demand, much of it related to declining property values," she said. "But people are also trying to maximize their tax benefits. Our clients are high-net-worth people, and our average loan is $1 million. We see demand for high loan-to-value all day long."

In Lynwood, Wash., Phoenix Mortgage and Investment Inc. reported it has been increasing its originations rapidly, topping $500 million in the first nine months of this year. John Fairchild, president, attributed the speedy growth partly to strong demand for mortgages of more than $200,000. Much of this demand is for purchase mortgages, he added.

Oct. 22 is Mortgage Awareness Day in New Jersey by proclamation of Gov. Jim Florio. To mark the occasion, members of the Mortgage Banks Association will join government officials in taking phone calls from people with questions about mortgages. The hours are 9:30 a.m. to 4 p.m. and the number is 800-437-5679.

After the mortgage bankers catch their breath, it's off to Chicago for the national MBA convention, which runs from Oct. 24 to Oct. 27.

Standard & Poor's loves Freddie and women love Fannie, at least as far as investment is concerned.

S&P selected Freddie Mac last week as part of its recommended portfolio of "stocks for superior long-term total return."

In Outlook, its investment publication, S&P gave Freddie Mac four stars, a strong rating. The list of recommended stocks includes only three-star and four-star issues.

Earlier, the Women's Equity Manual Fund, launched to invest exclusively in companies that advance women economically, named Fannie Mae as one of the 10 companies that meets its benchmarks.

The fund said companies are first analyzed for maximum long-term capital growth potential with minimum risk, then evaluated for their policies and records on women's issues.

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