SBA backing loans at prerecession pace

I’m starting to get the feeling from regional financial indicators that the economy is picking up — quickly.

For example, did you know that the federal Small Business Administration underwrote close to $16 million in loans in Boulder and Broomfield counties from Oct. 1, 2011, to May 23, 2012?

Now you do.

Federal loan dollars actually have been growing in the state economy since January 2011, according to Matthew Palmer, a spokesman for the SBA office in Denver. Since then, loan officers have been approving SBA-backed loans at a pre-economic recession pace, Palmer said.

Since the beginning of March of this year, the SBA has made almost 1,100 loans in Colorado, doling out more than $430 million per week nationally.

That’s a lot of dough, Palmer said.

“The pace of SBA loan-making is a healthy sign for the economy and the credit markets,” Palmer said.

The money helps create new jobs in the U.S. economy, he said.

Of all of the banks operating locally, Wells Fargo (based in San Francisco, but with 14 local branches) was far and away the largest SBA lender in 2011, Palmer said.

Lending cap stuck

Also on the lending front, credit unions probably will be stuck with their current lending cap of 12.25 percent of assets through the end of the year, according to a national credit union group.

A bill put forward by Sen. Mark Udall, D-Colo., to raise the lending cap to 27.5 percent appears to be stalled in Congress for the summer.

While the bill would inject an estimated $330 million into the Boulder County economy, it’s hard to get any traction for it in this busy election year, said Carlos Pacheco, president of Premier Members Federal Credit Union in Boulder.

New credit union loaning power of $330 million was estimated by the Credit Union National Association. The national trade group also estimated that about 420 new credit union employees would be hired in Boulder County alone, if the bill passed.

“This is a challenge in Congress in an election year,” Pacheco said.

Colorado Bankers Association president Don Childears agrees.

As a quick aside, bankers oppose the bill, saying it would be completely unfair for tax-exempt credit unions to compete more directly with tax-paying banks. And if the credit unions do want to compete, Childears suggests they change their charters to be mutual savings banks, where members can own shares, but the bank pays taxes.

“Senators don’t want to vote on it because it puts them in the position of choosing between two friends – the credit unions and the banks,” Childears said. “This is not a necessary bill.”

Credit unions in the state, on average, are loaning about 3.25 percent of their assets to members, Childears said.

Fewer late payments

On the residential loan front, mortgage delinquencies are at their lowest levels since the federal Office of the Comptroller of the Currency started publishing reports on mortgage performance in the first quarter of 2008.

The federal office singles out the “strengthening economic conditions” as the biggest factor behind the fact that fewer homeowners are falling behind on their mortgages. Government programs also get a pat on the back in the matter, as the “ongoing effects of home retention programs.”

On average, homeowners paid $437 less per month for their monthly loans than the previous amount they paid, if they were able to refinance their homes in the first quarter of 2012. That huge monthly drop came from historically low federal interest rates.

In addition, homeowners who qualified for the Home Affordable Modification Program saw their payments reduced by $588 on average. Basically anyone with a job and a home who complains that his or her loan payment is too high can qualify for the HAMP loan guidelines, which were expanded by President Barack Obama on June 1.

All you have to do is show that you have had your mortgage since before January 2009.

Of course virtually every homeowner who can refinance their mortgage already has done so, though, based on statistics from the Comptroller of the Currency.

Just 495 homeowners applied for a HAMP loan in the first quarter of 2012 in Colorado, according to the statistics.

Just 249 Colorado homeowners defaulted on loans that had been modified in the third quarter of 2011, according to the statistics.

Beth Potter can be reached at 303-440-1944 or via email at bpotter@bcbr.com.

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