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Hamstrung by jittery federal regulators, lending institutions in the last six weeks have put the brakes on making commercial real estate loans in what was already a tough market, local developers said.
"There is a major change that's happened in the last 30 days," said one developer who asked to remain anonymous. "Bank examiners are all over every bank in the country because of the S & L crisis," he noted. "Banks are real nervous now."
Federal regulators weren't available for comment, but developers were unanimous in their assessment of the lending environment. After talking heat for the well-publicized savings and loan crisis and for bank failures in New England and the Southwest, regulators are putting extraordinary pressure on federally chartered banks to curb their lending practices, developers said.
Commercial lenders have been cautious about loaning money for most real estate projects for several months, but now the federal Comptroller of the Currency's regulators pressing for more rigid underwriting requirements. And they're reclassifying existing loans in lenders' portfolios, which further cools the climate for new loans, sources noted.
"There's no question there's a credit crunch in the real estate industry," said F. Richard Rembusch, executive vice president of Browning Investments Inc.
Rembusch said an out-of-state bank that Browning Investments deals with recently invited its top-25 real estate borrowers to a meeting where bank executives blamed the dearth of loan approvals on federal regulators' over-reaction to the savings and loan crisis. That included reclassifying as bad loans some loans the bank...