Life Insurance Quotes Canada: Some Banks Are Still Making Mortgage Loans
Jul 17, 2009 Mortgage Loan
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There is no doubt that mortgage originations are lower than they have been in years, but there are still many banks that are making mortgage loans.
Smaller, community focused banks are still very active in the home loan business. That small banks are doing this should not be that much of a surprise. The beginning of the mortgage business was really small building and loan societies that funded local expansion with local investments. Of course, they go by different names nowadays, but lenders that focused on their core business and area have largely avoided many of the problems in banking.
They are actively lending to their customary clients and even expanding to pick up the slack where other lenders are no longer active.
The large, conventional banks are cutting back on mortgages across the board, but local, community based banks are predicting continued stability in their loans, although with not much growth.
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 remain close to the customer they are lending to. In fact, many of these banks are not only staying alive, they are earning a profit.
Organizations like Chicago’s Shorebank, which has $2.3 billion in assets and predominantly serves low income communities boasts a delinquent loan rate of 3.1% of assets, compared to the national average of 18.7%. Since they are working with sub prime customers, their rates are higher, and they tend to be extremely careful about how they manage their portfolio. And their goal is merely to be profitable, not profit maximizing, a interesting point made by Mark Pinsky, the head of Opportunity Finance Network, an umbrella group for these kinds of banks. Reading between the lines, profit maximizing may be understood to mean the greed that has been one of the foundations of the financial markets’ current woes.
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. ShoreBank is located in an abandoned 1920’s movie theater, not a multilevel steel and granite behemoth in a suburban corporate park.
These kind of lenders prefer to 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 interesting energy program that helps and encourages bank clients to lower their energy bills, making money available to pay the mortgage!
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Tags: home, Insurance, Life Insurance, mortgage, Mortgage Life Insurance, Mortgage Loan, real estate
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