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Cascade Bancorp Message Board

  • lovesmagnumpi lovesmagnumpi Feb 17, 2009 2:28 PM Flag

    Builder lines of credit

    According to a banker I know, the only responsible way for the bank to have given the builders a line of credit would be to have the loan secured--by land, bulldozers or whatever.

    What happens if it was secured by land values in Bend and the values have dropped by 75% or whatever?

    And, so no one knows why they weren't given any TARP money.

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    • A better question might be, did they stick their hand out and ask for TARP funds?

      Not sure of the answer, but do you know that they requested TARP funds and were denied or are you just assuming they asked and were denied?

    • Years ago most banks would only loan on commercial real estate and a value that was 80% of cash flow. Residential and homes based the repayment on income from other sources.

      If the rent from a commercial project was $1,000 a month the maximum loan payment was $800. Bare land, development loans and speculation were handled by private parties and not regular banks. There used to be many contracts and other seller financing.

      I guess things changed a lot. Not many investments are more risky than bare land with no income.

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