There is no doubt that home loan originations are lower than they have been in years, but there are still many banks that are making mortgage loans.
Small, regionally based lenders are still very actively granting home loans. This should not really be a surprise. The origin of the mortgage business was small, regionally focused "building societies", who took in deposits from local citizens to lend out to local homebuyers. Of course, they go by other names nowadays, but banks that focused on their core business and area have for the most part avoided many of the problems in banking.
They are still able to not only make mortgages available, but are even growing their mortgage portfolios to fill some of the gap created by the big players who have been forced out of the market because of rapid expansion in poor loans.
Big commercial lenders have cut back drastically in mortgage lending, but the small community banks have continued their mission, even if their growth has slowed.
These financial entities, which include development banks and credit unions and may even be non-profit entities, have been very successful lending to poor risk borrowers because they are involved with the customer. In fact, many of these banks are not just staying alive, they are earning a profit.
Organizations like Chicago's Shorebank, which has $2.3 billion in assets and mostly serves low income communities boasts a delinquent loan rate of 3.1% of assets, compared to the national average of 18.7%. They do lend at increased rates than for prime rate borrowers, but they are careful about the risks they take. They strive to be profitable, but not to be involved in "profit maximizing" according to Mark Pinsky, CEO of Opportunity Finance Network, an umbrella group for community development finance institutions. 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 problems?
If you look at the salary of a CEO of one of these small community based organizations, 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 see a problem. The location of Shorebank is a modest renovated movie theatre, not an expressly 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. For example, Shorebank has an innovative energy program that assists and encourages bank clients to lower their heating bills, making money available to pay the mortgage!
Small, regionally based lenders are still very actively granting home loans. This should not really be a surprise. The origin of the mortgage business was small, regionally focused "building societies", who took in deposits from local citizens to lend out to local homebuyers. Of course, they go by other names nowadays, but banks that focused on their core business and area have for the most part avoided many of the problems in banking.
They are still able to not only make mortgages available, but are even growing their mortgage portfolios to fill some of the gap created by the big players who have been forced out of the market because of rapid expansion in poor loans.
Big commercial lenders have cut back drastically in mortgage lending, but the small community banks have continued their mission, even if their growth has slowed.
These financial entities, which include development banks and credit unions and may even be non-profit entities, have been very successful lending to poor risk borrowers because they are involved with the customer. In fact, many of these banks are not just staying alive, they are earning a profit.
Organizations like Chicago's Shorebank, which has $2.3 billion in assets and mostly serves low income communities boasts a delinquent loan rate of 3.1% of assets, compared to the national average of 18.7%. They do lend at increased rates than for prime rate borrowers, but they are careful about the risks they take. They strive to be profitable, but not to be involved in "profit maximizing" according to Mark Pinsky, CEO of Opportunity Finance Network, an umbrella group for community development finance institutions. 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 problems?
If you look at the salary of a CEO of one of these small community based organizations, 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 see a problem. The location of Shorebank is a modest renovated movie theatre, not an expressly 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. For example, Shorebank has an innovative energy program that assists and encourages bank clients to lower their heating bills, making money available to pay the mortgage!
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