Mortgage lending is fraught with the fear factor in the post Meltdown world.

And it’s having a severely negative effect, from Main Street, to Wall Street, and all the way to the stock exchanges of Europe and Asia.

The problem is that a critical element of the worldwide recovery is the revitalization of the U.S. economy, and that, in turn, needs a robust housing market.

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Which can’t happen if people can’t get mortgages. The Federal Reserve, in an ellipictally worded but nevertheless clear cautionary statement has said, in effect, banks and regulators need to stop impeding the flow of mortgage money, or the economy will have a tough time rebounding.

A lot has been made of post crash underwriting and down payment guidelines that are now in effect, but that’s not the problem at all. The criteria today are about what they were in the late ’70s and early ’80s, and the housing industry was just fine.

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Nope; the stick in the wheel is that everybody’s scared to death of making a loan. Fannie Mae and Freddie Mac, virtually the exclusive capital sources for vanilla home loans, have Congress and just about every federal agency breathing down their corporate necks, so they’ve loaded up the lending process with a deluge of minutia and stipulations. Banks selling to these agencies live in mortal fear of repurchasing a loan, with the consequences of a bad asset and raised regulatory eyebrows.

Many, if not most, community banks, which should be in the forefront of providing mortgage money in their market areas, are so concerned about noncompliance with the plethora of new laws and regulations covering mortgage lending that they won’t make one mortgage loan, let alone serve their customers the way they could and should.

It’s easy to criticize all of these people, agencies and entities, but the consequences of a mistake, even inadvertent, can be very painful. Lost jobs, regulatory sanctions and ruined careers are very real possibilities, and indiscriminate criminal prosecution is perceived, correctly or otherwise, to be a distinct possibility.

There are also economic reasons that banks, especially smaller ones, don’t seize the opportunity to significantly enhance their bottom lines by jumping into mortgage lending. Compliance today, because of the regulations recently adopted and the agencies conceived to enforce them, is very expensive.

This dread of lending is like writer’s block in a novelist; banks can’t do what they must do to survive.

Because of its intensity, it may take a lot longer to get the dollars moving than the Federal Reserve would like.

In the meantime, if you’re qualified for a loan, don’t stop trying to get one. Interest rates will probably never be better in your lifetime.

Pat Dalrymple is a valley native. He’s been in the mortgage and banking business since 1961. He’ll be happy to answer your questions or hear your comments. His e-mail is dalrymple@sopris.net.