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While standards for issuing government-backed loans have clearly tightened for borrowers with spotty credit, bankers report the criteria for someone with a good credit score mirrors standards used before the crisis.
October 31 -
Banks appear to be effectively using a government program to help struggling borrowers refinance their underwater mortgages in order to make monthly payments more manageable.
August 6 -
In the Federal Reserve Board's most recent survey of loan officers, bankers have a host of concerns keeping them away from originating loans held by Fannie Mae and Freddie Mac.
April 30
WASHINGTON — The quality of lending for most types of loans is likely to remain fairly steady this year, according to a survey of loan officers released Monday by the Federal Reserve Board.
The central bank's Senior Loan Officer Opinion Survey, which interviews 75 banks on policy changes and shifts in demand for certain products, asked banks their yearly outlook on delinquencies and chargeoffs on a range of lending types. (The Fed has asked the same set of outlook questions every January since 2006.)
"Overall, large fractions of domestic banks, on net, expected improvements in delinquency and charge-off rates during 2013 for most loan categories included in the survey, assuming that economic activity progresses in line with consensus forecasts," according to the survey.
Those opinions were mostly the same as their expectations for loan categories a year ago, the Fed said.
For commercial and industrial loans to large and middle-market firms, 51% of domestic banks said loan quality would likely stabilize at current levels, while 43% believed there could be improvement. Results were similar for such loans made to small firms with only one bank anticipating loan quality to deteriorate.
"These responses indicate a somewhat less widespread expected improvements in the quality of C&I loans relative to the 2012 survey, which is largely consistent with already low delinquency and charge-off rates on such loans by historical standards," according to the survey.
Like last year, roughly 55% of domestic banks said they expected the quality of C&I loans to improve for large and middle-market firms in the coming year.
Additionally, half of all domestic banks anticipate the delinquency and charge-off rates on prime and nontraditional residential real estate loans to improve in 2013 — a result similar to last year's survey.
"Expectations for improvements this year in the quality of HELOCs stayed roughly the same as last year, with about one-third of the respondents anticipating an improvement in the quality of such loans," according to the survey.
When it came to commercial real estate lending, many domestic banks said they had reduced the spreads on CRE loans and several banks eased policies regarding the maximum size and maturity of such loans.
Still, banks didn't indicate a change in their policies of debt service coverage ratios to loan-to-value ratios. Of the domestic banks that responded, 97% said their loan-to-value ratios were still the same.
Lastly, loan officers were asked about their lending practices to European banking institutions.
"On balance, about 10% of domestic banks reported that their standards for loans to European banks had tightened over the past three months, a smaller fraction relative to the previous two surveys," according to the survey.
For their part, foreign respondents said their standards were "essentially unchanged."
Most domestic banks — 49% — which reported competing with European banks, indicated they had experienced a decrease in competition from such institutions over the past three months, but the decrease had not boosted their business.
Roughly 30% of domestic banks indicated that the decreased competition had helped increase their business.
