Loans Expert

Nine of the largest banks to receive money through the government’s $700 billion financial market rescue program cut back lending to small businesses in January, the Dow Jones Newswire reports.

The total volume of small-business loans outstanding at the banks fell 1% in January, the U.S. Treasury said in a report released late Monday. New loan originations for small businesses dropped 28%.

Meanwhile, total average loan balances at the institutions rose 2% to $1.064 trillion in January. Overall new loan originations were down 35%.

The Treasury attributes much of January’s fall in overall originations to sharply higher new lending activity in the previous two months.

The nine top U.S. banks that received government rescue funds in January made the fewest amount of new loans since October, government data showed on Monday.

Loan originations at the nine top banks that received bailout money from the Troubled Asset Relief Program fell to $35.9 billion in January, down $19.3 billion from December levels, Treasury said in its monthly TARP lending survey of the top banks.

It was the smallest amount since October when they hit $41.6 billion. October was the last month that new loans had fallen.

Rising home prices and an improving economy are expected to spark a modest rebound this year in home equity lending. But lenders and homeowners will be more cautious about converting their equity to cash, muting any boost to the economy, said Greg McBride, a senior financial analyst.

“Home equity borrowing won’t be the economic crutch it was a few years ago,’’ said McBride.

As borrowers tap into the value of their properties, lenders will make about $36 billion in new home equity loans in the next 12 months, according to a forecast by Moody’s Economy.com in West Chester, Pa. That will increase the outstanding balances of the loans by 4.2 percent to $903.5 billion from a two-year low of $867.3 billion this quarter.

Bank of America stepped up its mortgage modification efforts in March, completing 60 percent more than a month ago.

The nation’s largest bank performed 20,666 loan modifications in March under the government’s Home Afforable Modification Program (HAMP). That is up from 12,761 in February.

Bank of America also said it now has 240,000 active trial modifications open under HAMP. Homeowners must go through a trial modification period in the HAMP program before the modification is made permanent.

“We are in a position to show strong results in completion of permanent HAMP modifications as we move into spring,” said Jack Schakett, loss mitigation strategies executive for Bank of America Home Loans.

The value of home mortgage advances in January fell by half from December, when there was a late rush to complete deals before a tax break ended at the New Year, the Council of Mortgage Lenders said Friday.

The value of home mortgages in January was 4.7 billion pounds ($7.1 billion), down 45 percent from January. The value of remortgage loans dropped by 12 percent from December.

“When December and January data are taken together, they show little change in underlying market conditions compared with recent months, with activity still slow but well up on the lows of a year earlier,” said the Council’s director, Michael Coogan.

Six Democratic senators — Tom Carper, Blanche Lincoln, Ben Nelson, Bill Nelson, Mark Warner and Jim Webb — are working to blow up Obama’s top education reform: Ending the corporate profiteering on government loans for college students.

As I reported in Obama’s Real Reform, privatized government loans to students create a massive cash cow for notorious lenders like Sallie Mae and Nelnet:

The Obama administration is trying to prop up small businesses with more funding for community development banks.

Obama’s fiscal 2011 budget seeks $250 million in additional funding for community development financial institutions, or CDFIs, a Treasury Department official told Congress Tuesday.

“We strongly believe that further support is needed for CDFIs to help serve distressed areas manage through the economic downturn,” said Michael Barr, assistant secretary of the U.S. Treasury for financial institutions.

Barr testified before the House Financial Services Committee, which is considering proposals for making federal funding more accessible to small businesses.

Delinquencies on loans in commercial mortgage-backed securities increased last month, largely because of loans made in 2005.

Commercial-property owners got increasingly behind on their mortgages last year as occupancy rates and rents fell, driving property values down from their bubble highs.

Fitch said CMBS delinquencies were 6.29% in February, up from 6% in January. The delinquency index includes 2,505 loans totaling $28.5 billion. Five-year loans originated in 2005 constituted about 30% of the month's newly delinquent loans and comprised the four biggest loans in the period.

Banks know what the public wants to hear: They’re lending money to the little guys.

JPMorgan Chase & Co.’s new ad campaign publicizes the bank’s plans to lend $10 billion to small businesses this year. Other banks, including Wells Fargo & Co. and Huntington Bancshares Inc., also say they’ll extend more small-business loans.

Bold promises, for sure. Just don’t expect to know many details on how they’re delivered.

Forget searching for “small business loans” on the banks’ Web sites to get specifics on the progress of these new programs. Same goes for digging into the banks’ finances, because you aren’t going to find this segment broken out in one spot.

They were the first in their families to attend college. In addition to the values and of hard work and service that they inspired in me, their examples are what motivated me to continue my education and earn a college degree.