When will the banks start lending again?

**isee** · 02-13-2009, 06:31 AM

I'm sure the majority are sick and tired of reading doom and gloom stories about the ailing real estate market. Undoubtedly matters will not improve until banks start lending again.

Our business has noticed a significant increase in enquiries over the past month, fortunately a high number have been cash buyers. My question maybe is too simplistic, however, if banks have been bailed out either with cash injection and or guarantees from governments - what then is the hold up?

Surely they should be forced to start lending or be totally taken over by the state. Its all very well that interest rates are falling (not so good for savers of course) but for first time buyers and families desperate to trade up it doesn't mean a damn.

**Business with Greg** · 02-13-2009, 08:57 AM

The federal injections and takeovers kept them lending and offering the programs they still do.

The loans they do not offer anymore became unprofitable over time and contributed to this disaster. As you probably know the collateral did not pay the money lent out on the majority of foreclosures. Sub-Prime loans had no PMI to protect the lenders against these losses.

People would default on a $15.00 a month credit card payment then be given a home loan for $600+. Sub-Prime was ridiculous.

Lenders rely on PMI companies to insure loans over 80% LTV so that they are able to profit during a loan or come closer to breaking even after a foreclosure.

Those insurance companies have losses mounting and are the reason Stated Income, Investment, Cash Out, and various other loans are not available over 80% LTV.

Fannie Mae and Freddy Mac still offer the loans as long as they have PMI. Fannie Mae and Freddy Mac did however incorporate new risk based pricing adjustments in mid December which made several loans too expensive for lenders/investors to continue to offer.

I cannot imagine this industry without Fannie Mae and Freddy Mac though. It would be a disaster!

Can you be more specific on what type of people are unable to get loans in your neck of the woods? Maybe I can help with some suggestions or direction.

It does not help when Wall Street is in the condition it is and the unemployment rate is over 7% either. When these 2 items recover and Banks, Investors, Buyers, and the overall economy comes around you might see lending open up a little more but in no way shape or form like it was 3 years ago.

**Greg** · 02-14-2009, 04:24 AM

Loans are available around here. Of course you need to have a job, some down payment money and good credit but this should always be the norm.

I keep hearing donald trump being quoted about how he can't get a loan so there must not be loans for anybody out there. Wrong. He has at least 1 bankruptcy on his record which should make him a bad candidate for getting a loan. Don't listen to the news. They make this stuff up.

**Codythebest** · 02-14-2009, 05:26 AM

So I guess you're lucky Greg.
Here, no loan available. My last example: 6 digits salary buyer, 720 credit score, 35% down on a $115,000 property: DENIED!

To answer the OP: when the Falcon won't be available anymore and when they get tired of partying every night...

**isee** · 02-14-2009, 07:34 AM

Originally Posted by Business with Greg

The federal injections and takeovers kept them lending and offering the programs they still do.

The loans they do not offer anymore became unprofitable over time and contributed to this disaster. As you probably know the collateral did not pay the money lent out on the majority of foreclosures. Sub-Prime loans had no PMI to protect the lenders against these losses.

People would default on a $15.00 a month credit card payment then be given a home loan for $600+. Sub-Prime was ridiculous.

Lenders rely on PMI companies to insure loans over 80% LTV so that they are able to profit during a loan or come closer to breaking even after a foreclosure.

Those insurance companies have losses mounting and are the reason Stated Income, Investment, Cash Out, and various other loans are not available over 80% LTV.

Fannie Mae and Freddy Mac still offer the loans as long as they have PMI. Fannie Mae and Freddy Mac did however incorporate new risk based pricing adjustments in mid December which made several loans too expensive for lenders/investors to continue to offer.

I cannot imagine this industry without Fannie Mae and Freddy Mac though. It would be a disaster!

Can you be more specific on what type of people are unable to get loans in your neck of the woods? Maybe I can help with some suggestions or direction.

It does not help when Wall Street is in the condition it is and the unemployment rate is over 7% either. When these 2 items recover and Banks, Investors, Buyers, and the overall economy comes around you might see lending open up a little more but in no way shape or form like it was 3 years ago.

Thanks Greg, it very much varies. Alot of UK buyers traditionally used the equity in their homes to free up cash to purchase. Banks are being very stringent here in remortgaging. Obviously there are still cash buyers out there seizing opportunities.

Regards

Jules

tailoredhome.co.uk

**Greg** · 02-14-2009, 08:54 AM

Cody,

Why was the loan denied?

**Codythebest** · 02-14-2009, 02:34 PM

Originally Posted by Greg

Cody,

Why was the loan denied?

The house is in wood.

**Greg** · 02-15-2009, 04:44 AM

Originally Posted by Codythebest

The house is in wood.

I don't understand. They denied the loan because the house is made of wood or in the woods?

**Codythebest** · 02-15-2009, 05:49 AM

Originally Posted by Greg

I don't understand. They denied the loan because the house is made of wood or in the woods?

The house is made of true log. It is a cabin like the picture shows.
These log cabins are big business here.
This one brings $37K gross income/year.
And it is in a wooded area of course, because that's what the guests are looking for: coming from Busy N-Y or Chicago and relax at the foot of the Smoky Mountains.
The problem was because it is built in wood, logs, tongues and groves and hardwood floors...

**jamesww** · 02-15-2009, 11:22 AM

Originally Posted by Codythebest

The house is made of true log. It is a cabin like the picture shows.
These log cabins are big business here.
This one brings $37K gross income/year.
And it is in a wooded area of course, because that's what the guests are looking for: coming from Busy N-Y or Chicago and relax at the foot of the Smoky Mountains.
The problem was because it is built in wood, logs, tongues and groves and hardwood floors...

Well then your buyer did not get rejected the property did and all you have to do and go find a lender that will make a loan on that type of property rather than sit there and complain about the banks not giving loans or adding to the troubles in the market by saying people cant get loans. I am just sick of this crap. Banks will loan if your byer has good credit, reasonalbe debt ratios and enough mney saved for a down payment and reserves. Go be proactive find the lender that is willing to do loans on these types of properties and do joint marketing with them. All my recent business has been on properties requiring Jumbo loans because nobody else has been marketing for these types of properties or buyers looking for those loans. I found a lender that is doing jumbo loans around 6% requiring only 25% down. It has kept my business alive.