Definition of "Commercial banks"

The largest financial intermediaries directly involved in the financing of real estate. Commercial banks act as lenders for a multitude of loans. While they occasionally provide financing for permanent residential purchases, commercial banks primary real estate activity involves short term loans, particularly construction loans ( typically 6 months to 3 years ) and to a lesser extent home improvement loans. Most large commercial banks have a real estate loan department; their involvement in real estate is through this department. Some of the largest commercial banks are also directly involved in real estate financing through their trust departments, mortgage banking operations, and real estate investment trusts (REITs). All commercial banks are either federally (nationally) chartered or state chartered. National banks are chartered and supervised by the U.S. Comptroller of the Currency. The word "national" appears in their title, and they are members of the Federal Reserve System (FRS). However, only 1/3 of all commercial banks are members of the FRS, even though the member banks control the majority of total bank assets. Nationally chartered banks are also required to maintain membership in the Federal Deposit Insurance Corporation (FDIC). Federally chartered banks can make real estate residential loans up to 90% of the appraised value with a maturity of not more than 30 years. However, any government insured or guaranteed loans are exempt from these limitations. State chartered banks are regulated by various agencies in their particular state, and membership in both the FDRC and the FRS is optional. Banks not members of the FDIC are normally required to maintain membership in a state insurance corporation.

image of a real estate dictionary page

Have a question or comment?

We're here to help.

*** Your email address will remain confidential.
 

 

Popular Real Estate Terms

Type of investment company that invests money in mortgages and various types of investment in real estate, in order to earn profits for shareholders. Shareholders receive income from the ...

Frame surrounding a door or window to block adverse weather. It may be made of wood, metal, or other material. The frame may be fixed or moveable. ...

Same as term Veterans Administration Mortgage: Mortgage guaranteed up to 30 years by the Veterans Administration to veterans meeting minimum requirements. Originally established by the ...

Within Real Estate, “nuisance” is a term used to describe any disturbance that might affect neighboring houses. Nuisance abatement is the enforcing of policies and codes that ...

Calculator having various financial functions including present value, purchase price, property appreciation, lease costs, loan and mortgage amortization. ...

A lease requiring tenants to pay all utilities, insurance, taxes, and maintenance costs. ...

Any structure projecting from a wall or other vertical element for the purpose of providing support for a weight or other object. ...

Bankruptcy declared by any insolvent person or business. In contrast to involuntary bankruptcy, which is applied for by the creditors. ...

Residing in a structure that the individual owns. ...

Popular Real Estate Questions