Construction loan concerns

FDIC shuts down local bank loan program


The Federal Deposit Insurance Corporation (FDIC) has halted the construction loan program offered by First Community Bank of Southwest Florida.

Bank President Edward "Chip" Black said construction loans were the bank's biggest business and had been for some time, until the FDIC order.

Black said the bank made construction loans on 12 percent of all single-family homes in Lee County in 2004.

Tighter loan regulations is a good thing for our real estate market. Many of these loan programs were targeting buyers very much on the edge. I am pleased that the FDIC is taken proactive action on this issue to prevent a catastrophe like the S&L Crisis of the 80's. Weeding out high risk buyers and improving the quality of local lenders loan portfolios is a good thing for the industry.

Regulators may be getting nervous over real estate bubble [News-Press]