While the nation’s growth has promoted a years-long housing recovery, some consumers report that they’re having trouble getting mortgages for an unusual reason: the loans they seek are too small. The Wall Street Journal recently reported that many consumers are having a hard time qualifying for mortgage loans worth less than $70,000. Fortunately for consumers, small mortgages remain the bread and butter for community banks in upstate New York and across the nation.
Community banks make one in every three home loans under $100,000 and 31 percent of small mortgages in rural areas, according to Home Mortgage Disclosure Act data. And as relationship-based lenders, community banks can explore all loan options – including home equity lines of credit and second mortgages – to find the best fit for each borrower.
Tioga State Bank in Spencer routinely makes $50,000 loans, with our average consumer mortgage loan eclipsing $100,000 only in recent years as home prices have rebounded. If we didn’t make these kinds of loans, we wouldn’t be serving our market, and the same goes for community banks across the country.
Meanwhile, regulatory reforms signed into law last year will help ensure continued access to mortgage credit by simplifying burdensome underwriting, escrow, appraisal, and reporting mandates enacted after the 2008 financial crisis. These common-sense reforms under the Economic Growth, Regulatory Relief and Consumer Protection Act are reducing compliance costs and helping community banks meet the needs of consumers at every income level.
Low- and middle-income homebuyers seeking smaller mortgage loans should begin their search at their local community bank. Community bank lenders pride themselves on meeting the unique needs of their local communities, one loan at a time.