“Bank of America has balance-sheet capacity and we’ve allocated it to jumbos given our presence in some of the states and regions where that’s important,” Desoer was quoted as saying.

The bank sees an opportunity to issue more of the loans with Merrill Lynch’s “mass-affluent” customers, even as it continues to integrate the acquired company, she said.

To keep up with mortgage demand the bank has added roughly 3,000 employees to its origination unit, including about 1,000 new to the company and 500 shifted from its home-equity division, as well temporary workers, she said.

She was also reported as saying that the bank’s purchase of Countrywide Financial Corp was paying off.

“Volume is good, application quality is holding up and the acquisition of Countrywide is really paying off for us with the additional capacity,” she was quoted as saying.

(Reporting by Ajay Kamalakaran in Bangalore; Editing by Greg Mahlich)

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This is great news and very, very important for markets like San Diego where values are considerably higher than in many more rural locales.  The lack of Jumbo loan product leaves a very big hole in Real Estate financing.  It’s a great thing that conforming rates are at historic lows but we cannot expect first-time buyers to be the only segment of the population spurring on the housing recovery.  In San Diego, homes in the mid $500K range are considered fairly affordable and while they are much more abundant than in the recent past, there is a huge segment of coastal and executive housing that eclipses this price range.  What about move-up buyers or buyers looking for a ‘destination location’ home in which to retire?  Today, this buyer is seriously without financing options and we are losing important impetus in our markets. 

The next thing we will have to figure out is who will offer investor loans (non-owner occupied) and stated income programs that are reasonable.  Business owners who utilize the tax deductions available to them via our tax laws have no financing options today.  Certainly, these loans were abused and have contributed to the current market morass but they are an important segment of the market and need to be available at competitive rates to be used responsibly.