Toronto Term Life Insurance: You Can Still Find a Bank for a Mortgage
Banks have been cutting their mortgage loan portfolios back, that is certain, but the careful borrower can still find a mortgage.
Small, regionally based lenders are still very actively granting home loans. 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 money to build Bob’s house. Even if they may no longer be called building societies, this center of attention has protected them in the recent housing market turmoil.
They are still lending in an around their local area, the community they know, and in many areas are filling the hole left open by the big lenders who are now gone.
While major banks project reduced loan volume in all categories, including mortgages, community banks expect stable numbers in loan volume for single family homes, but no increases.
Community lenders such as this, that may include credit unions and development banks, have had great success in lending to the so-called sub prime borrower, because they stay close to the customer they are lending to. In fact, many of these banks are not just staying alive, they are turning a profit.
A good example is Shorebank of Chicago, a $2.3billion asset bank which is active in the low income community of this city and, in contrast to the national average of delinquencies of 18.7%, has only 3.1%. Since they are working with sub prime customers, their rates are higher, and they are extremely careful about how they manage their portfolio. They strive to be profitable, just not “profit maximizing” according to Mark Pinsky, CEO of Opportunity Finance Network, an umbrella entity 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 crisis?
For example, Douglas Bystry, of Clearinghouse CDFI, earned a salary in 2007 of $190,000, as compared to Angelo Mozilo of Countrywide Financial’s $22.1million salary in 2007. The location of Shorebank is a modest renovated movie theatre, not an expensively built corporate complex.
This is a group of financiers who are worlds away from the big lenders, but close to the loans they originate, continuing to service them and therefore concern themselves with the economic health of their borrowers. For example, Shorebank has an innovative energy program that assists and encourages bank clients to lower their energy bills, making money available to pay the mortgage!