There are still loans to be made - WALB.com, Albany News, Weather, Sports

There are still loans to be made

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By Karen Cohilas - bio | email

September 30, 2008

ALBANY, GA (WALB) - With all the talk of bank failures and bailouts, you've probably heard that getting a loan for a house or a car has become more difficult.

While that's true, it's not impossible. Commercial banks, your local banks, are still lending.

It's a lesson in basic economics: Don't spend money that you don't have. A lesson that was altogether ignored for too long.

"At the end of the day, what happened is people loosened up underwriting standards and didn't make sure that the people they were lending money to could pay it back," said Heath Fountain, CFO for Heritage Bank.

Now there's economic turmoil. Investment banks are going belly up, but what about community banks... the place where you keep your money?

"The smaller banks are still able to service their customers needs," said Frank Griffin, Chief Lending Officer of Flint Community Bank.

Commercial banks are heavily regulated, so in turn, they put in place stringent guidelines as to who they will lend money to. People who are more likely to actually pay that money back.

"A person with good credit, that meets the credit requirements, there's still money for them to get a loan, to get a mortgage, get a car. To get the things that they need," said Griffin.

"By adhering to sound traditional banking practices and lending practices, I think most of the community banks have avoided most of the major problems," Heath said.

That doesn't mean they don't feel any impact from the crisis on Wall Street.

"The community banks are still dependant on the financial system to be operating normally and functioning properly," Heath said.

But for now, things are still moving along. "We still have money to lend. We still have good deposit rates, we still have the FDIC insurance, so things are still rocking along."

The lending officers we spoke to say not everyone can get a loan. The days of lending to folks with no down payment and poor credit are over.

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