| For a long time, small local banks have taken a bad | | | | contact with, as they have no need for enormous |
| rap in comparison to the largest mortgage companies | | | | customer service departments, loss mitigation |
| and the resources of mortgage brokers with access | | | | departments, collections departments, and a small |
| to literally hundreds of different lenders. With the | | | | army of supervisors, managers, and vice presidents. |
| collapse of many subprime lenders and severe | | | | Banks with such departments, despite their enormous |
| tightening of credit in the consumer lending market, | | | | resources, often fall behind in their efforts to provide |
| however, it may finally be time for homeowners to | | | | any personal or meaningful service to clients in |
| give their local bank another look. Especially if they | | | | desperate situations. Community banks, again, also |
| may anticipate facing foreclosure or another hardship, | | | | have a vested interest in helping homeowners stop |
| working with a community bank may be much easier. | | | | foreclosure and repair their financial situations. |
| One good reason to consider local banks is that the | | | | A final reason to consider using a local bank for |
| mortgage will most likely not be packaged, sliced up, | | | | mortgages is that these banks will use the money they |
| and sold off to investors in the secondary market, with | | | | receive from the interest on a loan to extend more |
| a change of mortgage servicing company every few | | | | credit to families and businesses in the area. |
| months. Smaller banks that operate in a local area are | | | | Community-oriented banks can invest in the future of a |
| much more likely to hold onto their loans and continue | | | | neighborhood, allowing local business communities to |
| collecting payments for the life of the mortgage. | | | | flourish and provide goods and services to the people. |
| Foreclosure victims often complain about lenders that | | | | Cities with no strong community bonds are more likely |
| sell the loan but do not inform the borrowers, or a | | | | to fall victim to larger corporations coming in and |
| foreclosure process that is thrown into confusion when | | | | sweeping up the wealth of the area before leaving the |
| the bank sells the loan right in the middle of everything. | | | | neighborhood in a poorer state than it was before the |
| In fact, the financial investment that local banks have in | | | | corporations moved in. |
| their loans is another reason to consider using one | | | | Although local banks, because they did not offer the |
| instead of a large national lender. Community banks | | | | extreme lowest rate and the most creative financial |
| have a vested interest in keeping wealth in the area, | | | | products, have been somewhat neglected by the |
| because they will be more likely to collect the entire | | | | mortgage purchasing public in recent years, the |
| amount of the mortgage back. Large banks that | | | | collapse of the subprime market and blatant exhibitions |
| sweep in, pump a community full of money, then leave | | | | of corruption may change this trend. As the large |
| with the wealth of the area as the bubble bursts have | | | | banks tighten lending even further, it may be |
| no reason to improve the lives of the people living | | | | community banks that will have to step up and |
| there. They simply pump and dump a neighborhood | | | | contribute more to the long term economic health of a |
| and leave the people to deal with the economic | | | | city or county. With so much talk of a depression |
| devastation left in their wake. | | | | coming as a result of the housing bubble, the only way |
| In the case of a foreclosure, smaller banks may also | | | | for some areas to avoid poverty may be for them to |
| be more flexible and easier to work out a deal with. If | | | | become more self-centered and focus on preserving |
| nothing else, they are almost assuredly easier to get in | | | | wealth in the community. |