While major national banks and mortgage lenders seem to get the lion’s share of the media spotlight, local community banks, mortgage banks, and credit unions are the banking choice for millions of Americans.
More than 4,000 community banks and 10,000 credit unions serve customers across the country. Most are locally owned and operated. They know their customers and maintain long-term relationships in their communities. In many cities and towns, they are a significant employer as well.
Community banks and credit unions rightfully claim a long history of responsible lending, yet they can be especially vulnerable during an economic downturn. When fewer investors are interested in acquiring mortgage-related assets, the secondary market shrinks. As a result, small and mid-sized institutions may have less access to the funds they need to continue lending.
Fannie Mae has made serving community lenders a business priority. Under our congressional charter, we are responsible for providing liquidity and stability to the secondary market. This includes making sure that funds are available to lenders of all sizes, even during market disruptions.
The current market presents growth opportunities for community lenders, and Fannie Mae’s active support can help lenders seize those opportunities.
Fannie Mae offers our customers flexible servicing options, including the ability to retain servicing, which is central to the business model of many community lenders.
We share best practices and offer guidance in critical lending areas. While we created the Loan Quality Initiative (LQI) to help all lenders manage risk and support sustainable lending, LQI can be especially useful for smaller lenders by putting their underwriting processes on a par with bigger competitors.
Small and mid-sized lenders fill an important role in our banking system and provide meaningful service to their communities and customers. We are pleased to support that role by offering the liquidity and support they need.
If you are a community lender that is not yet doing business with Fannie Mae, we welcome the chance to demonstrate how our products and services can be of value to your organization. Please contact me as we look forward to helping you serve your housing market.
Vice President for Customer Management
November 15, 2011