Credit is the lifeblood of capitalism. Credit is also the lifeblood of commercial real estate (CRE). In the wonder years of 2006 and 2007, credit for CRE was cheap and easy to come by. Underwriting standards dropped dramatically. I remember saying in 2006 that real estate investors and lenders were no longer doing “due diligence” but just “diligence.”
Then the loans started to go bad. The horde of bank regulators followed. Next came new regulatory guidelines from the Office of the Comptroller of the Currency (OCC) regarding CRE loans. Then commercial real estate lending came to a standstill. For most of the past three years, it is safe to say that banks have made virtually no commercial real estate loans. The OCC guidelines strongly encouraged this behavior in our national banks. The FDIC and state regulators adopted similar stances.
There are two relevant OCC guidelines that have put a limit on CRE lending for every bank in the country.
Read more...Good News for Texas Commercial Real Estate - the Blog of the Real Estate Center | Real Estate Center at Texas A&M University
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