Banks stop Lending

http://miamitodaynews.com/news/060413/story3.shtml
Bank puts moratorium on mortgages for downtown Miami condos

By Suzy Valentine
An area bank has told lenders to pull the plug on mortgage lending for condo units in downtown Miami via an internal document circulated last month.
Officials of Coral Gables-based BankUnited in a memorandum drafted about two weeks ago advised lenders to "suspend lending for high rises in downtown Miami ... with the exception of area loans ready for sale."
Bank spokeswoman Melissa Gracey said the directive could have given a false impression and the intention was to encourage fiscal responsibility in resale of loans.
"It's about diluting the risk in the portfolio," Ms. Gracey said. "We sell a percentage of the loans, and we're looking at loans that aren't readily available for sale. It's all about balance-sheet management."
She said BankUnited did nothing any of its competitors would not do in the present marketplace.
"Every financial institution that supplies mortgages sells a percentage in the secondary market," Ms. Gracey said. "There are those that are easy to sell and those that are difficult. We have to do loan-to-value comparisons for credit, and this is about limiting the number of loans that may be more difficult to offload."
Other banks have become leery about financing purchases of condo units, a broker said.
"Union Bank, BankAtlantic and Colonial Bank - they have all announced they don't make loans," said Hank Rodstein, president of HR Mortgage and Realty. "Of course, they always make exceptions, but with all the bubble talk and as the interest rates go up, people are becoming spooked."
Either lending dries up, he said, or developments go to the wall.
"A lot of the product that was coming isn't," said Mr. Rodstein. "There's 1390 Brickell, Premiere, and I heard that Met 3 would be reinvented as a hotel and then an office building rather than condo units. Then there is a bunch of secondary stuff. Ice and Element and the like are all on the back burner."
Construction is slowing in Miami Beach, he said.
"Take Saxony," said Mr. Rodstein. "That isn't coming for six months at least. How many projects do you see under way on the Beach? It's practically built out."
Some projects are performing stronger, he said.
"I just talked to the guys at Neo Vertika," said Mr. Rodstein, "and they're seeing lots of activity. One Miami is closing on 890 units - 80 to 90 of those units are already for rent."