Even local banks are tightening up!

ARRRGH! I’m so frustrated!, I’ve spent the last three days on the phone with about (no kidding) 10 different local banks, none of which can be of any help to me!

I’m looking for a lender to refi my HM loans into, just for traditional NOO ARM loans or whatever, nothing fancy or exotic. I’d like to cash out some, but I’d just settle for a regular refi right about now.

Some banks aren’t accepting any new customers, others have raised their stds ridiculously high, other won’t lend one county over, and one bank completely shut down their NOO loans altogether! I feel like a salesman cold calling potential customers hoping to just make one sale!
Fortunately I’ve got a few more warm leads to follow up on, I just pray one of them will work the refi for me.

Is anyone else seeing this tightening even in the local banks? It seems like when word gets out of one local bank doing certain loans, word spreads like wildfire and the bank gets swamped with requests by investors desperate to find money and almost immediately clams up!

This has been happening for about 6 months now.

  1. Banks have less of their own money to lend now because they’re holding on to more of it. (not specifically because of stress test but they feel liquidity is important)

  2. Since these types of loans mature several years out they want stronger borrowers who wont be at risk of not qualifying for refinances.

Not doing loans from one county to the other is standard. They want want borrowers with a local presence.

I’ve been calling on banks across the country for over a year now. It’s very time consuming and you must make sure you speak to the right person within the bank otherwise you could be spinning your wheels.

What city/state?
Do you have good credit, strong financials, and are the properties rented with solid cash flow?

The local banks around here want me to transfer my bank accounts for my other businesses to them prior to giving me a loan. Otherwise they are not willing to do business. So I have to keep getting my loans from my primary bank right now. Very aggravating having one business have you by the family jewels like that.

I was told by a regional VP of BB&T that they are not lending right now because interest rates are so low. He said why would we want to get locked into long term unprofitable loans when we know inflation is right around the corner.

I’m in SE Wisconsin, and to answer your questions, the members of my LLC have decent credit (just below 700, not as good as I’d like but thats what it is currently), I have strong equity positions in my property (25-30% typically) and I’d NEVER buy a property that didn’t cash flow properly (~$200/unit/month).

All that good stuff put together and still they consider it too risky?!!
Hooch-I had one bank say the same thing about bringing all my depository accts over to their bank before they’d even talk to me basically.

At first I thought the acquisition money was the hard part, now I’m finding that all the HM in the world doesn’t do any good without a proper exit strategy, ie a bank to refi with. They get ya going in and they get ya comin out!

Does anyone think we’re still in the contraction phase of lending with these local banks, meaning are things going to get worse before they get better? or does anyone see signs of expansion in the near future?

Anything less than 680 is pushing it for commercial loans with local banks.

Your monthly $200 positive cash flow is not how a bank will calculate cash flow. They do this in terms of debt service ratio. If you havent gone over this with a bank then you may want to consider having someone coach you through what local banks are looking for.

You didnt mention anything about liquid assets…(not 401ks or retirement funds)

My opinion is that its going to get worse.

The first wave of defaults was the subprime market. We’ve still yet to see the defaults from the Alt-A and Option Arm markets. Those will be in the next 1-2 years unless banks/government can figure out a way to fix this loans so that the arms dont adjust. Most of the loans have either high ltvs or negative equity.

In addition to the residential markets still looking bleak the commercial markets are soon to feel the pain. Many of the local banks current clients who have adjustables or balloons are experiencing the same difficulties that you are. So if those clients are not capable of refinancing you’ll see defaults in the commercial markets, including strip malls, multi, wharehouse, etc.

Wow…that’s certainly depressing.

If we haven’t hit the bottom yet it is my opinion that we are close.

The government is intentionally creating hyperinflation by the mass printing of money that we don’t have. The banks are not lending right now because interest rates are too low. Do you blame them? Why would you lock yourself into a long term loan with low profit potential when you can hold out for interest rates to increase and cash in nicely.

Inflation causes interest rates to increase and that is what they are waiting for. This is why when you get a commercial loan today they will only guarantee the rate for 5 years. They dont want to lock in for long because they will be able to cash out shortly down the road.

Forced inflation will result in people having jobs and business will boom for a while until we hit the peak.

Go here for an understanding of hyperinflation and it’s impact in an extreme example of Germany after the war.

I bought 2 properties last year with my own money.

I am calling banks everyday and not having any luck.

My case is a little different seem I have bad credit, and low income on tax returns.

I already sold 1 property, and I am going to have to sell the other soon. I rent it for $850

I feel that some banks try to work with me, my situation is just beyond what they can do.