Wall Street Banks To Put Tight Restrictions On Borrowing In Post COVID-19 World. They Plan To Collapse The Market And Run Away With Billions

wall street banksIt’s deja vu all over again! Wall Street banks are planning another big money grab by decimating the housing market.

Wall Street banks have announced they are tightening lending guidelines after begging the Federal Reserve to buy up hundreds of billions of dollars of mortgage-backed securities. The fed agreed to buy the securities hoping it would boost liquidity for banks. The Fed hoped it would encourage them to lend more money to jumpstart the devastated economy.

However, banks like JPMorgan Chase are doing the opposite. JPMorgan Chase has led the charge to raise standards. The nation’s fourth-largest bank jacked up its borrowing standards on home loans. It also suspended HELOCs and other credit line programs.

Homebuyers seeking a mortgage through JPMorgan Chase must now have a credit score of at least 700 and must put down 20 percent of the total purchase price. The bank said it is shifting focus to refinances, which have taken off amid historically low mortgage rates.

US Bank increased its minimum credit score requirement to 680 and Wells Fargo said it was restricting its jumbo loan program. Wells will now only allow customers with at least $250,000 in liquid assets to refinance,

Wells Fargo and US Bank soon followed. 

The decision will have dire consequences for the housing market. The actions of the Wall Street banks also come at a time when nonbank lenders don’t have access to Federal Reserve funds. The worry is non-bank lenders may not be able to absorb a flood of defaults. This is a similar situation that happened in 2009.

Wall Street Banks Make Decision To Crash The Housing Market Again! 

Wall street BanksWall Street banks have moved away from the residential mortgage space since the financial crisis. They cited low margins and a need to focus on more profitable lines of business.

Nonbank lenders emerged to fill that void. Companies like Quicken Loans, Freedom Mortgage, and LoanDepot now originate more than half of all the residential mortgages in the United States. 

But those alternative lenders are now facing growing concerns about their ability to service mortgages.

If a loan goes into default, will those nonbanks have enough cash to pay the interest payments? Probably not.

Nonbanks don’t have access to the hundreds of billions of dollars that the Fed can pump into banks.

If those alternative lenders get wiped out, it could mean fewer players in the home loan space going forward. It also means Wall Street banks could pick up assets at fire-sale prices as they did before.

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