Credit-starved industry wants more from Clinton.

In January, President Clinton stood before Congress and pledged he would work with bank regulators to ease the "credit crunch."

Last week, the Clinton administration presented its broad outline for a relaxation of banking rules designed to increase commercial lending to small businesses. And, while the proposals contain implications and rewards for the credit-starved real estate business, many industry members were left last week crying for more.

The details of the specific changes were not released because the administration supposedly has not completed their drafting. The revisions will require no legislation but rather negotiations with the nation's different banking agencies. Members of Congress, however, fearing more lenient standards could reverse banking's recent recovery, have said they will hold hearings.

The relaxations are aimed at easing some of the "excessive" lending rules that cropped up as a result of the Savings and Loan crisis and the significant decline in real estate value. The proposals address mostly the way real estate used as collateral appraised and how the credit worthiness of borrowers is evaluated.

Bank examiners would be allowed to look more kindly on borrowers who are meeting their loan payments even though the current loan-to-value ratio on the property is not favorable.

Certain "strong banks" -- yet to be defined -- would be able to make clusters of loans under a certain size to groups of small businesses with minimal documentation.

Other measures would make accounting changes that will make it easier for banks to sell foreclosed real estate. Real estate used as collateral for business loans would not require a certified appraisal, and the plan would lift the $100,000 threshold for loans that require a licensed appraiser. Regulators are said to be considering raising that floor to $250,000.

Bank examiner's decisions would also be more open to appeal by banks.

Cary Brazeman, spokesperson for the National Realty Committee, one of the industry's leading lobbying groups, said they are hopeful these measures can help create a lending "climate" more conducive to making commercial and industrial loans and with that real estate loans.

But, while these are "productive steps," said Brazeman, more must be done to ensure ample credit for the real estate industry. "What was announced yesterday was no silver bullet that is going to end the credit crunch...'

Not included in the president's broad outline, he said, are measures that would strengthen the secondary markets for commecial eal estate lending.

"We're hopeful it will be addressed in the future," he said.

Relief in Sight

The measures are long overdue, said Steven Wichik, senior vice president, Fourth Federal Savings Bank. Current constraints on lenders, he said, are making today's borrowers pay for the "sins" of yesterday.

"It's like locking the barn doo after the horses have been stolen and making the barn a vault after it's been wiped out," he said.

Mortgage brokers, whose efforts to satisfy client demand have been frustrated by skittish bankers, were grateful for any sign of relief.

"Any help that the banking industry would receive from the president to ease regulations would improve all aspects of the real estate business," said Michael Coratolo of Michael V. Coratolo & Associates, Inc.

In addition to an increase in financing, Coratolo said, the industry would see a boost in the number of sales. The inactivity in the market, he said, is due in large part to lenders onerous demands on borrowers.

"They go above and beyond the call of reasonability," he said.

Less Scientific Approach

Peter Brooks of Austrian Roth & Partners and president of the New York Metropolitan Chapter of the Appraisal Institute, said the changes would be beneficial "assuming they make an intelligent relaxation of the rules..."

"In the same way some people have been concerned we have been overregulated, what appraisers don't want to see is their customes telling them how to appraise property," he said.

Brooks said he was puzzled by the proposals that will no longer require, in some cases, licensed or certified appraisers.

If they don't think a competent appraiser is necessary, said Brooks, "why require appraisals at all.

Brooks said the real estate industry would surely be helped if bank examiners took a more lenient, less scientific view towads loans on properties where the value has dropped considerably, but the borrower is still able to make his payments. Other elements to consider, he said, are credit history of the borrower and the "likelihood" of the property to do well in the future.

"Let the banks look at not just what the property is literally worth if [the borrower] sold it in a few months...'

John Leonard of Salomon Brothers' Bank Group, in a prepared summary, called the proposals "for the most part constructive." But, with no force of legislation, he is concerned about implementation. Many, field examiners, he said, have "suffered personally" due to criticism over the lax regulations of the last decade.