Banks are in growing trouble, and it’s affecting Los Angeles real estate. U.S. Fractional Reserve banking system basically allows banks to lend out almost all of the money on deposit, creating a system that is precariously close to collapse, even in good times. Today, under extreme financial strain, a banking system collapse is a hair away. A minor bank run has already occurred over the past few weeks on the East Coast. There’s not much to stop a banking panic in L.A. A major bank run from coast to coast would quickly result in extremely low limits on withdrawals, then massive money printing by the federal government, followed by serious inflation.
LOS ANGELES REAL ESTATE NEWS:
Financing Begins To Dry Up
Los Angeles Property Market Recession Update — Just got off the phone with one of L.A.’s most experienced and powerful mortgage lenders. She mentioned that lenders are facing various challenges, particularly tightening. Chase and other banks are no longer offering HELOC Home Equity Line of Credit, as equity is rapidly evaporating. Too many homeowners and prospective home buyers are recently and currently losing their jobs. | Blog Video
The lenders have basically tightened up their requirements, and they’re now limiting loans to those who have at least 700 FICO score and 20% down payment.
Wells Fargo has basically just shut off jumbo loans. Other banks are also having jumbo problems, and are requiring at least 20% down
Today, we just informed a new home buyer who wanted to put down 5% that a 20% down may be required. There is also an increased risk to his deposit because new home builders are under increasing financial stress. We suggested that buyers of new construction homes wait and verify that developer’s new homes are at least 30% sold out, or preferably 50% sold out before plunking down a significant deposit. | LOFT LENDERS
Loft Condo Prices Tumble
This week, a buyer and seller just agreed to reduce the price by nearly $50,000 on a Los Angeles loft condo in escrow so that the buyer would not cancel under the Force Majeure clause.
Small business loans have run dry. Bank of America has been failing to provide loan status updates, responding with errors like “Unable to complete your request at this time”:
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