Sturdy Banker: Mortgage Funds Abound

COURT HOUSE — Wall Street is reeling from the “credit crunch,” but the word on South Main Street from Sturdy Savings Bank’s executive vice president is, “We’re anxious to take the opportunity to provide funds to home buyers and builders and the rest of the real estate market.”
Reeves and Kevin Deely, vice president, senior residential and consumer lending manager, spent time reviewing how the locally-owned savings institution is ready, willing and able to fund homes for Cape May County buyers.
Because Sturdy, with $450 million in assets, is a “mutual savings bank,” (meaning it derives its funds from depositors within the community), it is largely unaffected by the much-touted credit woes that are roiling big financial institutions.
“We are anxious to make mortgages,” said Reeves.
Over the past several years, the downturn in real estate has softened demand everywhere, including at Sturdy, he said.
Sturdy, in business solely within this county for 85 years, has a reputation for knowing its customers, commercial and retail, on a personal level, said Reeves. For that reason, it may be easier for homebuyers to get a mortgage there than going through a sub-prime lender, especially if their credit score is not stellar, he said.
“Banks are seeing competition from mortgage lenders. There is stiff competition,” said Reeves.
He said that banks are now, “anxious to bring back some borrowers who went to other sources.”
“We have plenty of funding for those kinds of mortgages,” Reeves added.
Over the past month, Realtors, buyers and brokers, as well as some owners who are refinancing, “are turning to us instead of outside the system,” Reeves said.
Home loans, especially for dwellings priced under $417,000, the break point for what is considered a “jumbo” loan, are a mainstay for Sturdy, said Deely.
Homes priced over $417,000 do not qualify for Fannie Mae backing, while those under that amount qualify, he added.
“So the mortgage bankers and lenders are struggling to find buyers for bigger loans,” said Deely.
“But we have funding,” he added, and stated that Sturdy would likely hold the majority of those loans, “in our own portfolio.”
First time homebuyers may want to look into a special savings match program offered by Sturdy, known as the First Home Club.
It prepares potential buyers by helping them establish a savings account for their down payments. In fact, the program, linked with the Federal Home Loan Bank may provide matching funds for those savings, said Deely.
For a minimum of 10 months, a prospective buyer will go through a credit counseling process. When they open a savings account with a qualified institution (Sturdy is one), and save on a regular basis for a minimum 10 months, there is a match that could result in $5,000.
“What we want to do is foster a savings pattern that prepares the first time home buyer, and gets then used to setting aside money,” Deely said.
While credit scores are “a fairly important factor,” in securing a home mortgage, they are not an overriding factor, he said.
That is where the personalized, local banker concept comes into play, he said.
Because the people taking the applications and approving the mortgages are locals, they know about businesses and trends in Cape May County.
“We monitor (credit) scores, and look at the whole picture, while other loans may be offered by mortgage bankers, they tend to be more credit score driven,” said Deely.
Credit counseling sessions are provided for those who may not meet a criterion. “We provide a review of their credit report, and a credit expert working with them allows them to analyze their credit profile and to offer suggestions to them to improve their credit in a reasonable time frame,” he added.
Those interested should visit a local branch. The service is provided through the mortgage department.
Those with less than perfect credit, who used to turn to easier to secure sub-prime loans, may find it more difficult, and more expensive in that market, because of the tighter lending policies instituted in some larger lenders, said Reeves.
Others affected by the shifting market were often owners with adjustable rate mortgages or ARMs, said Reeves.
He said Sturdy has been working with ARM holders in a “modification program” that offers a fixed rate.
“It’s been popular so far,” he said. That is because it offers a level rate for the term of the loan.
Sturdy Savings Bank is not, and never was a “player in the sub prime market,’ said Reeves.
For those affected by the credit crunch, Reeves said the bank is seeing “flexibility from Fannie Mae in terms of concessions to credit quality.”
“If we produce a loan for less than $417,000 and it’s lesser credit quality, Fannie Mae will accept it. That was done in response to the crunch,” Reeves added.
The FDIC (Federal Deposit Insurance Corp.) is offering suggestions on how to handle adversely affected current homeowners,” Deely said.
“We’ve been here 85 years,” said Reeves. “We know the players in all those markets (residential, commercial and commercial fishing), and have good acceptance in those markets. I think our credit standards are fairly flexible,” Reeves concluded.