More banks tightened standards on residential and commercial real estate loans during the final quarter of 2007 than at any time in the 17-year history of the Federal Reserve's quarterly survey of loan officers. A record 55 percent of loan officers at domestic banks surveyed in January said they'd tightened standards on prime residential mortgages in the fourth quarter of 2007, compared with 40 percent in the previous survey in October. Of the more than 50 banks surveyed, 64 percent said demand for prime mortgages was weaker, with 32 percent saying it was about the same. Only two banks, or 4 percent of those surveyed, said demand for prime mortgages was stronger. Some 85 percent of banks offering nontraditional residential mortgages such as interest-only and payment-option adjus...
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