This is a Multifold question and although you may believe it is straightforward it is not. There are many reasons banks are putting up road blocks to lending.
1 answer is, it is not the fault of individual banks, but the fault of the underwriters that are only willing to lend under requirements that are getting more and more stringent. Most banks are reliant upon these underwriters in order to make loans in the first place because the underwriter alleviates the risk of the bank by purchasing the loan after it is made. This allows the bank to make another loan after the underwriter purchases the first one.
A 2nd answer is that the banks do not want to make loans to anyone at the current rates, but since that is a socially untenable position, they are making the process as difficult as possible so that they can stall until rates are more favorable to them.
A 3rd reason is that after the crash, banks gutted their lending departments. This means that every there are fewer people paid to handle an ever growing number of mortgages. Because of this many lenders are denying "marginal" borrowers so that they can focus on the "slam dunk" borrowers. Also, because of this, the process for getting a mortgage, or even a refinance, has slowed down precipitously. To get a loan of any kind these days, you really need intestinal fortitude.
These are only a few of the reasons. I am sure my colleagues will come up with more.
You have to remember that banks (Especially publicly traded banks) are not people. They do not care about their fellow man/woman. Their only incentive is to make money. And not just a little money. They are designed to make as much money in as short a period of time as possible no matter what the consequences. This does not make them evil. It just makes them inhuman. If giving loans to the public does not make them enough money they will stop doing it. If That is not a good public position to take, they will put roadblocks in their own way to make it look like they are trying but just not "able" to accomplish the task. This is a problem that needs to be dealt with at the federal level. Hopefully it will be one day soon.
Please feel free to contact me with any more questions.
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