Community Banks Still on the Sidelines

Many community banks are still weighed down by non-performing construction loans, so their regulators do not want them issuing new construction loans, especially since so many small banks sank when the housing bubble burst. Originationnews tells MHProNews with housing starts up 3.6 percent Oct. 2011 to Oct 2012, community banks on a limited scale are getting back into the fray, especially in areas where the inventory of new home construction is low and builders are financially strong. Many smaller banks have done well with refinancings recently, driven by low interest rates and federal programs, and may be reluctant to take the risk of construction loans. But as the recovery gains momentum, and residential refinancings fall, as many forecasters predict, the game may be back on.

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