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Foreclosure Trauma Brings Back into Focus Advantages of Traditional Money Lending

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By : Adam Sanderson    99 or more times read
The foreclosure trauma has brought back into focus the advantages of traditional money lending following the failure of banks like ninepins. The banks got into trouble by being over confident. They only saw the profits but did not pause to think whether the borrowers would be able to manage the mortgage payments with their earnings.

In Westchester, one bank is not drowning but smiling while big names like Citibank, WellsFargo and Bank of America are going around with begging bowls. On the other hand Community Mutual Savings Bank, having its headquarters in Westchester has not had a single foreclosure since the last five years in any of its five branches in the county.

The bank personnel claim that their bank has been an oasis in these troubled times because they have not moved out of the conventional and traditional route. When clients come asking for loans they have to pass a simple test based on common sense. Can they repay the loan? It is doubtful if anyone will lend money to another who does not have the ability to pay back. Perhaps the rules might be relaxed in the case of the brother-in-law but not beyond that!

The officers of this bank give loans to the local residents who can prove their income levels by producing pay stubs and tax forms. Then also caution is taken to see that the loan amount is in proportion to the income level – it is not more than 30% of the income. Research is involved to find out if the value of the property in question is in tune with the current market value real estates. Down payments of 20% are required prior to the inking of the agreement.

Christopher Strauss of Community Mutual said, “We stick to the parameters that are age-old tested in the banking industry.”

Five years previously nobody would have given such talk a second thought – it would have been taken for granted but the recent crisis has highlighted the mess and utter failure of moving away from the beaten track. For this the jumbo glamorous banks are paying the price. The nation is suffering with them.

The chairperson of the board of Community Mutual, Thomas G. Ferrara, refers to the bank as “the old plain-vanilla bank”. It is compared to an institution of a small town in “It’s a Wonderful Life.”
Adam Sanderson, has been working on studying the foreclosures market, helping buyers on the finer points of foreclosure listings. Try to visit and search foreclosure homes.

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