Banks have been cutting their home loan portfolios back, that is for sure, but the careful borrower can still locate a mortgage.

Smaller, community focused banks are still extremely active in the home loan business. This is not surprising. Mortgage loans originated with the old building societies, such as we see each year on “It’s a Wonderful Life”- taking Joe’s depositsto build Bob’s house. Even if they may no longer be called building societies, this focus has protected them in the recent mortgage market market turmoil.

They are actively granting loans to their customary clients and even expanding to absorb the slack where other lenders are no longer active.

While major banks project reduced loan volume in all categories, including mortgages, community banks expect stable numbers in loan volume for single family homes, although no increases.

Community lenders such as this, that may include credit unions and development banks, have had extraordinary success in lending to the so-called sub prime borrower, because they remain close to the customer they are lending to. These companies are not only staying in business, they are making a profit on their loans.

Take, for example, Shorebank, a small community lender serving that city’s poorer community; its delinquency rate is 3.1%, in comparison to the national average of 18.7%. These lenders charge market rates which are higher than the ones available to prime borrowers, and manage their risk prudently. And their goal is only to be profitable, not profit maximizing, a interesting point made by Mark Pinsky, the head of Opportunity Finance Network, an umbrella group for these types of banks. Should we read profit maximizing as “greedy”, a term that has been applied to most of the mainstream lending institutions that are now reeling from the sub prime mortgage crisis?

If you look at the salary of a CEO of one of these small community based institutes, such as that of Douglas Bystry of Clearinghouse CDFI, at $190,000 as compared to that of Angelo Mozilo, CEO of Countrywide Financial at $22.1million, you can realize the problem. The location of Shorebank is a modest renovated movie theatre, not an expensively built corporate complex.

These kind of lenders usually remain close to their customer base, and by doing so, they can monitor their portfolio and protect their assets better. Take the program managed by Shorebank that educates its borrowers in energy conservation to save costs, money saved that can help pay the mortgage.

Related posts:

1. Canada Life Insurance Quote: To Wait or Not on Interest Rates
2. Best Life Insurance Quote Canada: Why Does Your Mortgage Insurance Cost What it Does?
3. Toronto Term Life Insurance: Finding the Best Mortgage Life Insurance Quote
4. Birmingham AL Mortgages
5. Advantages of Buying a Brand New Home

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This entry was posted on Wednesday, July 15th, 2009 at 2:17 am and is filed under Mortgages. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.