Why We Lend In Small Towns When The Banks Won’t
Banks often avoid small town lending because the borrowers don’t fit the ‘Big Lender Deal’ profile.
40 years ago when Kokanee Mortgage began, we saw a gap in small town mortgage lending.
Back in the 80’s, most lending was done by the banks. There wasn’t the extensive offerings from mortgage brokers like we have today. But since our founders were all well connected in the business communities of the B.C. interior, they were able to source out deals that would likely have been overlooked by the banks.
In the years that followed, several things began to change:
- The lending industry began to create space for credit unions and non-bank lenders
- Mortgage brokers went from being virtually non-existent to holding a majority stake of mortgage operations
- Smaller towns and rural locations became more attractive places to live
With the rise of mortgage broker driven business, news of what we do spread beyond our immediate trading area. And opportunities to lend arose province wide. Seeing this demand, we expanded first to Alberta, then to Saskatchewan, Manitoba, Ontario and finally the Yukon Territory. It was clear that the small town and rural property markets were under-serviced.
Many of the large lenders had, and continue to have, no interest in lending where we do.
Underwriting is more difficult, property valuation is more difficult, sales of property take longer and the list goes on. But for us, we’ve developed a sort of ‘secret sauce’ for lending in these markets. We have developed unique underwriting protocols to mitigate the risks.
On a more personal note for us here at Kokanee Mortgage, we get great satisfaction when we can help borrowers who are otherwise out of options. These are good borrowers, with good jobs and a nice property, but they don’t fit the big lender deal profile. Likewise, we help mortgage brokers to look like heroes for their borrowers by delivering their clients an option when they have been turned down everywhere else.
So, after 40 years, why do we continue to do what we do?
Why haven’t we become ‘big city’ lenders?
Because we love small town lending and well, we’re pretty good at it . It gives our investors, brokers, and borrowers exactly what they need.
