South France Immobilier Property & Luxury French Real Estate by RHF International

Banks have been cutting their mortgage loan portfolios back, that is certain, but the careful borrower can still find a mortgage.

Small, locally based banks are still very actively granting home loans. That small banks are performing this task should not be too much of a surprise. The origin of the mortgage business was small, regionally focused “building societies”, who took in deposits from local depositors to lend out to local homebuyers. Of course, they go by different 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They are actively lending to their customary clients and even expanding to absorb the slack where other banks are no longer active.

Big commercial lenders have cut back dramatically in mortgage lending, but the small community banks have continued their mission, even if their growth has slowed.

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 shoring up the communities they are located in. These banks are not just getting by, they are succeeding.

A good example is Shorebank of Chicago, a $2.3billion asset bank which serves the low income community of this city and, in contrast to the national average of delinquencies of 18.7%, has only 3.1%. These lenders charge market rates which are higher than the ones available to prime borrowers, and manage their risk carefully. They strive to be profitable, just not “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 companies that are now reeling from the sub prime mortgage crisis?

A case in point: Angelo Mozilo, the CEO of beleaguered Countrywide Financial, had a salary in 2007 of $22.1million, while Douglas Bystry, CEO of Clearinghouse CDFI had a salary of $190,000. The location of Shorebank lies in a modest renovated movie theatre, not an expressly built corporate complex.

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 borrowers in energy conservation to save costs, money saved that can help pay the mortgage.