Small Mortgages are a Community Bank Specialty

By Robert M. Fisher

The Wall Street Journal recently reported that lenders are originating fewer small mortgage loans. I can't speak for other types of lenders, but small mortgages remain the bread and butter for community banks 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.

My community bank in upstate New York 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 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 home buyers 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.

Robert M. Fisher is ICBA vice chairman and president and CEO of Tioga State Bank in Spencer, N.Y.