Mortage Insurance In Alberta: Some Banks Are Still Making Mortgage Loans
Written by Debbie F. Longo on July 20th, 2009
There is no doubt that home loan originations are lower than they have been in years, but there are still many lenders that are making mortgage loans.
Many local banks never got involved in the credit mess and are actively originating loans. This should not exactly be a surprise. Home loans originated with the old building societies, like we see this time of year on “It’s a Wonderful Life”- taking Joe’s money to build Bob’s house. Though they may no longer be called building societies, this focus has protected them in the recent mortgage market 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.
The large, conventional banks are cutting back on mortgages across the board, but local, community based banks are predicting continued stability in their lending business, although with not much growth.
But there are still many organizations, community-development banks, credit unions, and other entities that are not only still making loans, but lending to sub prime customers, because they are involved in helping out the communities they are located in. 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 predominantly serves low income communities has a delinquent loan rate of 3.1% of assets, compared to the national average of 18.7%. They do lend at higher rates than for prime rate borrowers, but they are careful about their risk. They do have profit as an objective, but they do not strive for “profit maximization” in the words of Mark Pinsky, the chief of Opportunity Finance Network. If we take profit maximizing as another word for greedy, then this may be one of the main points that separates these banks from the national giants that are on the ropes now.
For example, Douglas Bystry, of Clearinghouse CDFI, had a salary in 2007 of $190,000, in comparison to Angelo Mozilo of Countrywide Financial’s $22.1million salary in 2007. Besides salaries, another example might be everyday decisions; Shorebank is headquartered in a renovated building, not a new corporate high rise.
These kind of lenders prefer to remain close to their customer base, for by doing so, they can monitor their loans and protect their assets better. Take the program run by Shorebank that educates its customers in energy conservation in order to save costs, money saved that can help pay the mortgage.
Tags: Home, Insurance, Life Insurance, mortgage, mortgage life insurance, real estate
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