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Old 08-03-2020, 11:19 PM
 
3,940 posts, read 2,047,718 times
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It appears that the major banks are tightening loan standards and that doesn’t bode well for commercial real estate or the new home builders. Now the real question is: are they tightening in reaction to the Fed’s recent generosity (sure Big Guy, you can have it all), or are the banks doing their typical dance at the start of a recession where existing commercial loans are called and the only way to borrow new money is to provide 10X the amount in collateral?
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Old 08-04-2020, 01:01 AM
 
Location: Philadelphia (Center City)
888 posts, read 652,057 times
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“Major net shares of banks that reported reasons for tightening lending standards or terms cited a less favorable or more uncertain economic outlook, worsening of industry-specific problems, and reduced tolerance for risk as important reasons for doing so,” the Fed said in a March 9 statement, shortly before the pandemic declaration.

The banks can force the FED's hand to lower capital requirements perhaps, but it seems logical to tighten credit standards in a pandemic. Calling loans would just seem to make matters worse for commercial borrowers, especially in the retail space.. but that would seem to be a prudent move in some cases. Brick and mortar retail is one sector that will not spring back even if a vaccine is found and widely distributed.
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Old 08-04-2020, 09:09 AM
Status: "US-Of-Boratistan, jumped-the-shark, call it a wrap!" (set 5 days ago)
 
Location: Brawndo-Thirst-Mutilator-Nation
21,351 posts, read 22,249,634 times
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Economic outlook does not appear to have a big uptick anytime soon...........banks see this
and are taking precautions.
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Old 08-04-2020, 09:10 AM
 
Location: Pennsylvania
27,355 posts, read 10,809,078 times
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Quote:
Originally Posted by TimAZ View Post
It appears that the major banks are tightening loan standards and that doesn’t bode well for commercial real estate or the new home builders. Now the real question is: are they tightening in reaction to the Fed’s recent generosity (sure Big Guy, you can have it all), or are the banks doing their typical dance at the start of a recession where existing commercial loans are called and the only way to borrow new money is to provide 10X the amount in collateral?
The banks are always willing to loan you an umbrella --- until it's raining.
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Old 08-04-2020, 10:06 AM
 
17,446 posts, read 7,163,220 times
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I just gave up on even doing a home loan as the requirements just went on and on seemingly ad infinitum. I had the cash, just thought with such low rates I would do better using that money for investment.
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Old 08-04-2020, 10:27 AM
 
3,940 posts, read 2,047,718 times
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Quote:
Originally Posted by Hoonose View Post
I just gave up on even doing a home loan as the requirements just went on and on seemingly ad infinitum. I had the cash, just thought with such low rates I would do better using that money for investment.
Another article said that JPMC had stopped issuing HELOCs, and they were requiring 20% minimum down payments for new mortgages. That is going to chill the mortgage business even if rates are at all-time lows.
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Old 08-04-2020, 11:40 AM
 
15,896 posts, read 12,708,603 times
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I cant even talk to my banker. There is a line out the freaking door with 2hr wait times. Banker wont answer my emails or phone or text.
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Old 08-04-2020, 12:50 PM
 
Location: Columbia SC
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A real estate friend of mine has recently lost two home sales as the buyers could not get a mortgage. In each case the lender cited being unable to verify the borrowers continued employment due to Covid.
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Old 08-04-2020, 01:01 PM
 
6,503 posts, read 2,838,288 times
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Thankfully I am not in the market for additional financing right now, but I hope this drives a run on credit unions to show more people how great they can be.

Retail banks make their customers bend over backwards to qualify themselves, only to nitpick reasons to not give the advertised rate on loan and credit products. Credit unions often have a flat credit score requirement, which if you meet that one low FICO score bar - for example, 680 - you can qualify for their best or advertised rate, no further questions asked. Your financial situation and income only affect the amount they will lend you.

Why would I want to subject myself to a Bank of America retail product at 13.99%, who is probably going to offer a stingy $5,000 limit, when I can apply at NFCU and already know I will receive the advertised 9.65% and end up with a much more generous line. It is not uncommon for borrowers to receive a $25,000 opening limit. It used to be $50,000.
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Old 08-04-2020, 01:54 PM
 
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There might’ve other factors but the volume of mortgage/refi request are ridiculous. One way to cut application flow is to tighten standards. The amount of refis that were occurring certainly put a massive amount of pressure on the processing capabilities
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