Academic journal article ABA Banking Journal

Residential Lending: A Few Bright Spots

Academic journal article ABA Banking Journal

Residential Lending: A Few Bright Spots

Article excerpt

The residential lending market has taken a well documented beating over the last year. During, and leading up to the start of the crisis, many banks saw their residential lending lines suffer as poorly regulated mortgage lenders popped up everywhere, taking business from the banks. Following the high rimes, however, many of these lenders went under, as liquidity dried up and the secondary market for the loans they originated went away, too. The collapse of these lenders may help some banks with money to lend in markets not decimated by the aftermath of those heady days. (See this month's cover story.)

To get a sense for the markets that might be performing reasonably well given the general state of the market, SNL Financial took a look at state-level aggregate commercial bank residential lending data from FDIC Call Reports.

We looked for markets with the top growth rates on a linked-quarter basis, from the first-quarter 2008 compared to the fourth-quarter of 2007 (see table). While not an ideal type of analysis, given the ability of bank holding companies to do things like shift loans among subsidiaries, it still gives a glimpse into what is happening in the markets.

The table demonstrates that, on a linked-quarter basis, the states that are currently seeing the most robust growth are the likes of Alabama, S. D., and Wyoming, with growth rates well above the national aggregate decline of -3.86%. These are all states where there was not a huge run-up, necessarily, in real estate pricing, and generally not states that were featured in the popular "flip your house" television reality shows.

Also in the list is the District of Columbia, whose suburbs are suffering in the aftermath of the housing market collapse. …

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