Lenders, Appraisers and Regulators Affecting Lending

Two news items Monday illustrated some reasons why in the aftermath of what many believe was an overly permissive lending environment the ability to create stability is tough.

The first was a press release linked on Twitter by Art Castle, executive vice president of the Home Builders Association of Kitsap County. The release was from the National Association of Home Builders, making the case that a lack of credit is threatening economic recovery. Lenders are getting tougher, but are blaming regulators. Regulators say they’re not being overly restrictive, that they’re not the ones telling lenders to withhold at this level.

From the release:

While federal banking regulators continue to maintain that they are not instructing institutions to stop making loans or to indiscriminately liquidate outstanding loans, builders responding to the survey cited the top reason that lenders have given them for restricting the availability of new loans or for tightening the terms of outstanding loans is that “regulators are forcing lenders to do it.”

The second item was one I heard on NPR, a story about how new appraisal rules are putting a cog in the lending market.

Again, regulators are getting some of the blame, but in this case the regulators themselves say they are working to tweak some of the rules to undo some of the unintended consequences.

Both items are relatively short and worth reading.

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