I think that the banks have a lot of nonperforming loans on their books because of the high rates of foreclosures all over the country. I know here is South Florida we were severely affected and had one of the highest foreclosure rates in the country.
I remember during the real estate boom banks were offer no doc loans which were essentially no documentation loans which meant that the borrower agreed to a higher interest rate, but did not have to prove their income in order to get approved for a loan.
This was crazy. I read in an article that there was a lady that had a real salary of $40,000 a year that had multiple mortgages on several properties and had mortgages totaling $900,000. How can a person earning only $40,000 a year possibly be able to owe $900,000 in mortgages?
I think that the banks also wanted to make money during the real estate boom and anyone with a pulse could basically get a loan. This is why banks have come full circle and are now requiring standards like a good to excellent credit rating and fair down payment of at least 20% before they would consider giving out a loan.