Mortgage Loans Are Still Available

November 16, 2007
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GRAND RAPIDS — Mercantile is well known for providing commercial banking services to small- and mid-size businesses, but it also has a full residential mortgage department, with mortgage lenders at most of its eight banking centers in and around the Grand Rapids, Holland, Lansing and Ann Arbor metro areas.

“We hear about the market slowing and that consumers can’t get loans, but I would say that’s not necessarily the case,” said Joy Hulst, vice president of Mercantile Bank Mortgage Co. “I’m just as busy now as I was last month and the month before. The mortgage programs we had yesterday, we still have today.”

Hulst doesn’t think the picture is as gloomy as it has been painted to be. People are still buying houses every day. Standards are a little tighter now, but there seems to be a misconception that people can’t get into a home anymore without money down. They can. There are still 100 percent home loan programs and other great programs out there, she noted. What has disappeared is sub-prime lending and the “alternative” mortgage products sold during the mortgage boom that are now pushing many homeowners towards delinquency or foreclosure.

Mercantile offers standard 15- and 30-year mortgage products and has handled about the same number of home loans this year as last, Hulst said. Home loans are sold to the secondary market and represent about 7 percent of Mercantile’s overall loans. The bank has never been involved in sub-prime lending, she said.

“We’re a community bank. Our customers trust that we’re going to advise them properly, and that we’re going to make sure we put them into something they can afford and that fits their needs,” Hulst added.

Ray Reitsma, senior vice president and senior lending officer, said on Mercantile’s commercial side, there are two sides to the equation — the funding side and the underwriting side — and neither one has really changed in any material way as a result of the events of the last few quarters. Mercantile’s underwriting standards haven’t changed either, he added.

“What has changed is that there is an imbalance in some markets between the supply and demand, and, as a result, the need for some of our services has changed a little bit,” he explained.

“If, for example, there is a large amount of residential stock in a community and a relatively modest demand, it would be unnatural for a flood of developers to come to us and say they’d like to add more to that residential stock. That’s the type of decreased demand I’m talking about.”

That kind of imbalance occurs from time to time in a market and it’s occurring right now in certain sections of the residential real estate market, Reitsma said.

The two ways a commercial borrower would be impacted, he said, would be if Mercantile’s standards or its ability to fund loans had changed — but neither has.

“We’ve been very consistent through this in the way we approach our business customers,” Reitsma noted.

“The change in the market has been very much focused on residential development and real estate. The commercial real estate and commercial and industrial part of our portfolio really hasn’t changed very much at all.”      

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