At a time when millions of homeowners are teetering on the edge of foreclosure and struggling to keep current on their mortgages, a handful of Indiana lenders are doing all they can to help borrowers with mortgage modifications, reports the Post-Tribune of Northwest Indiana (‘We Don’t Want the Properties,’ Lenders Insist, Feb. 19, 2009).

Unlike larger banks and nationwide lenders, Lake Federal Bank and First Federal Savings & Loan Association in Indiana do not sell their loans in the secondary market, meaning that if the two institutions foreclose on a borrower’s property, the loan losses stay on the lenders’ books and directly affect the value of their portfolios.

But even as their customers continue to experience deteriorating financial situations, these institutions prefer to maintain a personal touch with clients and help them avoid foreclosure or bankruptcy in any way they can.

“When a customer becomes late or delinquent, we contact them and try to do some work-out arrangement with them and go along with whatever we can do to help them,” says Gerald Skrabala, CEO of Lake Federal Bank, a banking and lending institution with several locations in Lake County, Ind.

Sheldon Cutler, executive vice president of First Federal, takes pride in knowing his staff maintains more personal relationships with its customers and how closely his employees work with their clients.

“If we find that a customer is having problems with their mortgage,” he says, “we will do everything we possibly can to help them.”

Cutler says that his institution will go out of its way to assist customers who need a loan modification, whether that means lowering their interest rate, offering them a partial payment option, or giving them a 90-day payment deferral to help them catch up.

Skrabala has the same mentality. “The last thing we want to do is foreclose on properties. We’re not in the property management business,” he says. “We don’t want the properties. We want the people to live in the houses.”

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