Magazine article Mortgage Banking

Banks Tighten Commercial Underwriting Standards

Magazine article Mortgage Banking

Banks Tighten Commercial Underwriting Standards

Article excerpt

After four consecutive years of eased underwriting standards, the majority of the banks surveyed by the Office of the Comptroller of the Currency (OCC) have tightened underwriting standards for both commercial and retail property loans.

The OCC's 14th annual Survey of Credit Underwriting Practices, released in June, noted that the disruption in financial markets that began in 2007 led to an abrupt change in risk appetite at the majority of the banks and a renewed focus on fundamental credit principles by bank lenders.

"Examiner assessments found that risk in both the commercial and retail portfolios increased over the past year, and they expect portfolio risk to continue to increase over the coming year," noted the OCC survey. "Key factors that contributed to the rise in product and portfolio credit risk were the weakening economy, rising energy costs, turbulence in the secondary credit markets, the downturn in the housing market and the anticipated impact of relaxed underwriting standards over the past few years on payment performance."

The OCC's 2008 survey included the 62 largest national banks and covered the 12-month period ending March 31, 2008. The aggregate total of loans was $3.7 trillion, which represented more than 83 percent of all outstanding loans in the national banking system. …

Search by... Author
Show... All Results Primary Sources Peer-reviewed

Oops!

An unknown error has occurred. Please click the button below to reload the page. If the problem persists, please try again in a little while.