Here is a recent example from a deal I was able to get done but it took three times as long as it should have. First the appraisal by my estimation was 10% to 15% low -- no one is sticking their neck out. I know this because I am seeing weekly transactions in the neighborhood. Then the maximum loan to value has gone from the ridiculous 100%, which no sane person should have done, to 70%, the bank in this case Wells Fargo & Company (NYSE: WFC), said it was because it wanted to maintain its AAA rating.
Another bit of pain. After I had everything in place, in the case of a home loan, subordination became an issue! Things are so specialized and compartmentalized that the lender has different underwriters and standards for its First Trust Deeds and its Home Equity loans and since I had both, the HELOC (a form of second mortgage) had to be subordinated to the First.
Guess what, they would not do it. Even though the bank was in essence subordinating to themselves!
Well, thanks to the patience and diligence of my loan officer Mike M. and some negotiating by me and several of my advocates, the loan went through with the required subordination, but it was way too hard and took duplicating the paperwork as if I was dealing with two different institutions.
All this effort for a high net worth individual with a clean balance sheet, plenty of equity and a great credit score. The money being distributed to the banks by the tens of billions may be cleaning up their balance sheets, but if it was meant to stimulate lending, it's not -- the loans are only trickling out.
Sheldon Liber is the CEO of a small private investment company and the principal for design and research at an architecture & planning firm. He writes the columns Chasing Value and Serious Money. Disclosure I own shares of WFC.