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No credit freeze on Kern's Main Street
| Monday, Sep 29 2008 5:13 PM
Last Updated: Tuesday, Sep 30 2008 7:27 AM
Credit freeze? Not so fast.
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Bakersfield residents — qualified ones — can still get home, car and business loans, local lenders say, despite Wall Street’s throes.
“We are open for lending in Kern County,” said Neil Marshall, chief financial officer at Kern Federal Credit Union.
As with other credit unions, home and car loans are a staple for Kern Federal, a $270 million-asset institution that opened in 1949.
San Joaquin Bank, meanwhile, a business bank headquartered in Bakersfield, is also making loans and maintaining lines of credit.
“We’re accommodating all of the credit requests of our customers,” said Bart Hill, chief executive officer of the $878 million-asset bank.
Applicants must be qualified, they say, and plenty of people do get turned down.
“Marginal borrowers just aren’t going to make it,” said Beth Cheatwood, branch manager of Medallion Mortgage, an affiliate of Bakersfield-based mortgage bank Golden Empire Mortgage Inc..
Medallion Mortgage is “still getting applicants like crazy,” Cheatwood said, as local home prices decline.
Would-be buyers today need a credit score of at least 600 and enough cash to cover a 3 percent down payment for federally insured loans, she said. In January, the down payment requirement will go to 3.5 percent.
Daniel Penrod, an industry analyst at the California Credit Union League, said mortgage volume for credit unions statewide increased 9.62 percent during the first six months of 2008 compared to the previous year. The measure counted fixed-rate primary loans.
Car loan volume has softened, Penrod said, but that’s mostly due to lower demand for new cars.
“It’s not because the money isn’t available,” he said.
Credit union membership has become widely available, now requiring only county residence, for example. Deposits are insured, as they are at banks, for up to $100,000 through an industry-funded program. Available institutions can be found at www.findacreditunion.com.
Marshall, of Kern Federal Credit Union, believes the current turmoil could be good for his not-for-profit industry.
“I think this is an opportunity for credit unions,” he said, which had been criticized by some for being too conservative during the real estate boom.
Most are now well capitalized, he said.
Institutions that made or were exposed to subprime and “exotic” loans have been hurting.
On Monday, Citigroup agreed to buy the banking operations of Wachovia Corp., the latest casualty.
In Bakersfield, the local office of Wachovia Mortgage, at 5300 Lennox Ave., had already closed, an empty office revealed Monday.
Wachovia Securities, which has a presence on the 11th floor of the Stockdale Tower building at 5060 California Ave., will not be affected by the sale.
Hill, of San Joaquin Bank, said the community bank has the same credit requirements as ever: It looks at the borrower’s ability and willingness to pay back the debt.
Lenders and brokers who made subprime loans, he said, often “overlooked the ability of the customer to repay the money,” he said.