Banks and lenders should be making all kinds of loans right now on real property and real estate. After all, the best time to buy a piece of property is at the bottom of the market when they are being sold too cheaply in distressed sales. If the bank lends money on such a piece of property, and it appreciates, even if the consumer or the borrower fails to pay, the bank owns an asset that is worth well above the original purchasing price; the exact opposite scenario of what hurt the banks so badly during the economic crash.
Unfortunately, due to new restrictions and banking rules, real estate lenders have to have more money on hand, and thus, are unable to lend out money right now when they should due to liquidity rules. The Risk Reward scenarios and valuations are completely out of whack, with the banks operational lending criteria. Of course, the banks are not looking at the consumer; they're looking at their own books, and afraid to make any risks right now.
Many banks are also highly exposed to commercial loans that they've made and commercial real estate is not out of the woods yet, and some say that crap is getting ready to hit the proverbial fan as we speak. This is all well known to economic analysts, bankers, and those in the real estate profession.
But what about consumer credit, revolving credit, credit cards, car loans, cash advances, and home equity lines of credit? Why are all these Consumer lenders being so sketchy? Because, they also have new rules, and this jobless recovery is continuing to shed jobs, even as the stock market points towards an expansion period, which has already started.
You would think that if the economy is now getting better that consumer credit would be loosened, as in the very near future credit defaults by consumers will go down drastically. Of course, right now everyone is playing it safe, so safe in fact, they may prevent the strong recovery that everyone is hoping for. Please consider all this.