The federal and bank regulatory agencies in June proposed loan-to-value ratios on real estate loans. The Mortgage Bankers Association, in a comment letter to the four regulators, urged they they be more flexible and not apply at all to one- to four-family residential loans that meet secondary market underwriting standards. Here are excerpts from the MBA comments on the application of LTV ratios to commercial real estate loans.

Funds available to finance commercial real estate continue to remain scarce. This credit shortage extends far beyond new construction to encompass existing loan refinances, funds needed for tenant improvements to retrofit re-leased space and monies required to provide capital improvements for property rehabilitation. A 1991 survey of life insurance companies, the typical providers of permanent commercial real estate loans, demonstrates the lowest volume of new commercial real estate loan commitments since 1982, when interest rates averaged 14%. This $6.3 billion in new commitments authorized represents a 55% decrease over 1990.

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