What's going on with Jumbo loans?

What are "Jumbo" Loans" and why are the rates higher (than smaller loans)? The real name for these loans is a Non-Conforming loan. In Texas, this is any loan larger than $417,000. The limit was raised higher than $417,000 in some areas of the US but this did occur in Texas, due to our reasonable house prices. The largest loan that Fannie Mae and Freddie Mac, now fully government-owed entities, will buy from a bank/lender in Texas is $417,000. Loans less than $417,000 are called conforming loans. Most conforming are bought by Fannie/Freddie. On Jumbo's though, the bank/lender must hold and service those jumbo loans themselves, or sell them to a private investor. Fannie/Freddie is not involved. In times past, with lower default rates, it was easy to find or service a jumbo loan. Now these larger loans are viewed as riskier than in the old days. Consequently, there is a larger "spread" in the interest rates - Jumbo loans may be .750 % to 1 % higher than conforming loans, depending on the Bank/Lender.