President Obama met with the Big Banks, Monday, December 14 to urge them to start lending again.  There is another meeting scheduled for December 22 with the small banking institutions.  The small banking institutions are typically the ones doing the most lending to small and mid-size businesses.  The biggest problem with the meeting that instead of just focusing on lending the issue of regulatory reform was brought up almost as a threat.  For Banks to increase their lending now they would have to take on increased risk because of the high unemployment rate and home values.  The hope is that the Banks will stop adding additional requirements on top of the requirements for FHA, VA, Fannie Mae, and Freddie Mac.  There will also be a push to do more loan modifications that include principal reduction; however, a lot of the governments leverage has been reduced with the repayment of the Banks TARP money.

I’ll be the first to tell you that the lending environment has changed a lot in the last couple of years, but there are still excellent loans available.  The First to drop was sub-prime, then Alt-A, then the lender overlays started by requiring higher and higher credit scores on FHA and VA loans, and not lending to someone if they did not have a credit score.  However, throughout all of this USDA has remained strong and kept their standards the same.  Also, since USDA home loans have a low default and delinquency rate lenders are not imposing the same overlays as FHA and VA, and a USDA loan does not have the loan level pricing adjustments of Fannie Mae and Freddie Mac.

“America’s banks received extraordinary assistance from American taxpayers to rebuild their industry, and now that they’re back on their feet, we expect an extraordinary commitment from them to help rebuild our economy.

- President Obama

The following from “The Business Insider“, partially illustrates with a humorous twist what Banks did with the TARP money.

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A USDA Home Loan is the best loan, since the credit score requirement has not been increased unlike Fannie Mae, Freddie Mac, and FHA.  You can still get a USDA Home Loan with a 620 credit score or even if you have no score.  With a USDA home loan their is no down payment requirement, and you can even finance closing costs (appraisal permitting).  I am here to help you, email Jeremiah or give me a call to discuss your loan options.

I really appreciate you coming back to look around. If you know of anyone else you think might enjoy my blog, please don't keep me a secret.

Related posts from Indiana's USDA Home Loan Expert:

1. What’s a Credit Score Got to Do With It?
2. The Benefits of a USDA Guaranteed Loan to Purchase
3. Why you Need to Act Now for the Tax Credit
4. Using a USDA Loan to Purchase a Home After a Foreclosure
5. The Good Faith Guarantee – What You Need to Know as a Borrower and a Realtor