September 30, 2011

Why the banks are not lending in the mortgage market

By Timothy Stull (

Even thought the economy has been improving, it has been stuck in nuetral for the last 12 months.  The underlying factor for the weak economy is the housing market.  Banks essentially will not lend mortgage money unless you have a stellar credit score, low DTI and a good down payment.  The banks state that they have plenty of money to lend….they just can’t find the qualified borrowers.  Banks have more capital now than they have had in the last 30 years.  In  fact, they have so much cash that they have driven down overall net US Treasury yields.  Remember, they were bailed out 4 years ago….big time.  The public is bickering that they can’t qualify for the morgage loans….the underwriting standards ar too strict.  So what is really going on here?  Two simple words define the cause turmoil ~ Priority Problem.  Since the mortgage crisis began in 2007, the general public has started believing that it is “OK” to not pay your mortgage.  This is a cancer like problem that has spread on a wide level.  It presents problems for future economic growth & growth in the lending cycle.  Banks will not absorb any risk in the mortgage market.  Many folks have set their credit card payments ahead of their mortgage payments….they are 2+ years late on the house payments & current on all credit card debt.  This drives the banks nuts….they are resistant to offer loan modifications….they are holding back on new loans.  Until there is shift in priorities among the public, the banks will not lend.  Many states have mandatory mediation hearing laws ~ so you can avoid foreclosure ~ so you don’t feel bullied by the banks.  However, entering into mediation can be very tricky.  The proper motions need to be filed on a pro per basis in order to secure position.  Fresh Start Legal Network is familiar with all the mediation laws in all 50 states.  Please call our office at 877.297.7011 or visit

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