Lenders tighten standards for real estate loans

USA TODAY, February, 2008 by Sue Kirchhoff

WASHINGTON -- U.S. banks are toughening standards for home mortgages and commercial real estate development loans, seeing more sluggish demand and predicting further delinquencies, according to a Federal Reserve survey released Monday that added to concerns about the faltering economy.

The quarterly survey made it clear that a credit crunch, which started last summer with rising defaults in higher-risk subprime mortgages, has spread to better-off consumers. Nearly 55% of U.S. lenders responding to the survey had tightened standards for prime mortgages in the quarter. That's up from 40% in the previous Fed survey.

About 60% of U.S. banks instituted tougher criteria for revolving home-equity credit lines. And 80% of domestic lenders set higher standards for...