Jan 13, 2012
Fed hints at changing caps and regs to spur commercial lending
13 Jan 2012
Posted by Andrew Kantor
With commercial lending risky as it is these days, Federal Reserve Governor Elizabeth Duke said that caps on loans — and the regulations around them — may need to be tweaked to encourage lenders to enter the CRE space.
Today, thanks to 2006 regulations, when the value of a CRE loan reaches a certain level (100% of capital if it’s secured by construction and land) stricter guidelines come into play.
To avoid those stricter guidelines, lenders will shy away from those caps, even when “promising, creditworthy lending prospects are available,” as Duke put it. Because of that, she suggested changes in lending guidelines might be in order.