May 20, 2011
Commercial lending comes under scrutiny
20 May 2011
Posted by Andrew Kantor
Here’s an interesting set of instructions: Lenders, we really want you to lend to commercial borrowers. Oh, but don’t forget the rules about having too much commercial exposure.
That’s pretty much what federal regulators told community banks, according to this Housing Wire story. Here’s a sample:
The standards were designed to address a growing problem — namely the fact that CRE loans are a main culprit today in bringing banking institutions down.
Commercial real estate accounted for 77% of the nonperforming loans at the most recently failed banks, analytics firm Trepp said earlier this year.
Regulators closed six banks on April 15, accounting for a total of $4.8 billion in assets. So far in 2011, there have been 34 closings, according to Trepp.
But, some banks are now accusing examiners of being too harsh in their treatment of CRE loans, making banks less willing to write business at a time when the CRE segment is in need of more activity.