Lawmakers pressured to extend assistance to commercial real estate market
Congress should step in to help the commercial real estate market gain access to credit, the National Association of Realtors says.
The group’s treasurer, Jim Helsel, testified before the House Committee on Financial Services Thursday and argued that a Congressional response to the problems plaguing the CRE sector was needed.
"Lack of available credit remains a significant challenge for our industry right now," he said. Banks are broadly unwilling to lend – and with CRE borrowers heavily dependent on community banks and credit unions, extending lending assistance to those institutions would help improve cash flow in the CRE market, Helsel noted.
Separate bills before consideration in Congress would help small banks boost lending. The Small Business Lending Fund Act of 2010 – which was stymied in the Senate Thursday – would provide $30 billion to community banks to encourage lending, while a resolution in the House would let credit unions lend more to businesses.
According to Mortgage Bankers Association data, CRE lenders are more willing to extend credit now than they were at the beginning of the year. CRE mortgage originations rose 35 percent between the first quarter and the second. But, MBA CRE researcher Jamie Woodwell said July 28, "Borrowing remains light as few commercial property owners are selling or refinancing their properties unless they have to."
Across the real estate sector, credit is tight – and the situation is challenging both residential and commercial borrowers. The Federal Reserve’s latest Beige Book survey showed broadly improving economic conditions, but the Fed reported that housing markets were "sluggish" and noted that "commercial and industrial real estate markets continued to struggle in all twelve districts."
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