Recordpub.com - Portage firms feel economic crisis fallout

By Matt Fredmonsky
Record-Courier staff writer
Wall Street and Main Street are close enough on the financial landscape that even local monetary institutions are feeling the aftershocks from the crumbling credit and housing markets.
At Home Savings Bank in downtown Kent, issues of the Wall Street Journal and Crain's Cleveland Business are piled up on the bank president's desk where Howard Boyle maintains up to-the-minute information on the financial meltdown in New York and the corresponding reaction from Washington, D.C.
Boyle said the Portage County based Home Savings Bank is not selling as many mortgages as he would like to, and because fewer homes are being sold the bank is receiving fewer pay-offs.
"We anticipate this thing is going to take some time," he said. "We could be in this thing another 18 months, regardless of what Congress does."
Sometime in October, Home Savings Bank will begin offering FHA loans, which are federally sponsored through the U.S. Department of Housing and Urban Development. FHA loans are becoming popular in part because of their low down payment requirements.
Boyle believes the move will help improve the market in Portage County.
Boyle said as real estate agencies began developing their own financial lending arms " one example is Howard Hanna Mortgage Services " banks were increasingly removed from the approval process in which home-loan applicants are scrutinized to determine if they can truly afford the payments on a mortgage.
Home Savings Bank posted no losses as a result of the subprime mortgage meltdown, but the local bank has been selling mortgages to Wall Street giant Freddie Mac for years.
"However, we always sold them good loans," Boyle said.
The bank has a portfolio of about $50 million in mortgages it has sold to Freddie Mac. In his 30 years there, Boyle said the bank has processed less than 10 foreclosures.
"You underwrite properly," Boyle said. "You loan to people who can afford it. And historically that's how it used to be done."
Across the Cuyahoga River downtown, Jim Bear, the senior vice president for retail brokerage firm Butler Wick, said his firm feels less of the effects of the struggling markets than the banks.
"We invest mainly in stocks, bonds, cash and mutual funds," Bear said. "We invest money for our clients. Where we would be impacted would be the same way as virtually anybody would be impacted. If this credit clog up we've had extended, virtually everyone would be in a recession."
Bear's clients, for the most part, understand the turmoil in the credit and housing markets and are not jumping the gun by moving toward short-term investments.
"We're more long-term investors and our clients are long-term investors," Bear said. "We've had very few people who have said they've wanted to change their investments."
Advice differs for each client, but Bear said people should focus on paying down high-rate debt like auto loans and credit card balances. Butler Wick is advising the vast majority of its clients to avoid risky investments.
At Edward Jones in Ravenna, investor Gary Miller said he advises his clients to remain calm about their investments and pointed to historic drops and gains in the market.
"Bear markets can be frightening and quite dramatic, but they generally are short-lived," Miller said.