Area loan officers of Southern West Virginia and Southwest Virginia declared that as the banking there was more conservative and stuck to more traditional practices, the region was able to avoid the mounting rate of foreclosures that was breaking out all over the nation.

An increase in the adjustable interest rates on subprime mortgages in 2007, left the investors who were financing new homes under that scheme, in great trouble. According to loan officer, Mike Day, who is associated with MCNB Banks, the consumers had thought that they would always be paying $400 as monthly mortgage and had thus signed up for the loans, but to their utter dismay they found the monthly mortgage rising to $650, which put sufficient strain on family budgets and ultimately led to foreclosures. Day goes on to say that, over and above all this , the price of gasoline and natural gases are also rising and thus the financial conditions were quite tough. But Day, as well as representatives of various other banks from that region remarked that in spite of all these different problems they have not noticed any marked increase in the volume of home foreclosures.

Lawrence Reed, Collection’s Manager, Bank of Tazewell County says, that they haven’t seen any increase in the rate of foreclosures as the bank follows a pretty conservative policy. He adds that, conservative products help in going through tough times. According to the director of secondary mortgage lending, First Century Bank, Hal Absher, the act of abstaining from subprime loans had once seemed a dumb move but ultimately it proved to be a pretty smart move. Absher further says that they have been conservative lenders, so they have stayed away from subprime loans and as a result they did not witness the hike in foreclosures.

The area bankers always keep one vision in mind ; that is, on the 1^st of September, 1999, the National Bank of Keystone situated in McDowell County, which happened to be one of the most big financial failures ever since the Great Depression, collapsed. Lawrence Reed remarked that this incident was an example of what could happen if banks followed unquestionable practices. He also said that whenever local banks think that some scheme for getting rich quickly is developing, they tend to fall for that and in the process somebody or the other tends to get burned. Thus following a conservative policy is definitely a foolproof measure of preventing foreclosures.

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Sticking with more traditional banking practices while institutions in other parts of the nation tried riskier loans has helped southern West Virginia and Southwest Virginia avoid the rash of mortgage foreclosures dampening America’s economy, area loan officers said.

In 2007, investors who financed new homes by getting subprime mortgages with adjustable interest rates began to have problems making their monthly payments when the interest rates on them increased. Since then, the foreclosure issue has been the focus of many debates and economic forums. With interest rates at their peak, things were not looking too rosy for home owners in the long run.

Mike Day, a loan officer with MCNB Banks, said consumers with such loans might have signed up thinking they would always be paying $400 on their mortgages each month, only to see these payments jump to $650 a month. Such increases can tighten family budgets and lead for foreclosures.

“On top of that, gasoline prices are on the rise and natural gas prices keep rising. Everything is on the rise,” Day said. “It’s a tough world to be in financially now.”

However, Day and representatives of other banks in the region said they have not seen an increase of home foreclosures.

“Really we haven’t seen any, mainly because we don’t deal in those loan packages,” said Collection’s Manager Lawrence Reed of the Bank of Tazewell County. “We’re still a little more conservative. Past conservative products carry you through the tough times.”

Hal Absher, director of secondary mortgage lending for First Century Bank, said staying away from subprime loans may have looked “dumb” once, but now it’s proven to be a “smart” move.

“We’ve been a conservative lender,” Absher said. “We haven’t had subprime loans, so we haven’t seen the spike in foreclosures, thank goodness.”

One vision area bankers keep in mind is the Sept. 1, 1999 collapse of the First National Bank of Keystone in McDowell County, one of the biggest financial failures since the Great Depression. It is an example of what can happen when financial institutions use questionable practices, Reed said.

“When local banks start thinking there’s a get rich quick scheme out there, somebody gets burned,” he said.

All in all, this is one of those parts of the country that has been fortunate enough to not be too dramatically affected by foreclosures. Unless interest rates come down, the threat of foreclosures increasing will continue.

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