Big Bank, Small Bank: A Story

From Edward Morneau 2/14/2015

Many years ago when I purchased my first house I got a mortgage from  my credit union. It was a small, friendly, efficient credit union,  dedicated to municipal employees and, at the time, because of the size  of its operation, needed to and could safely sell off these mortgages  to a large mortgage investment company. This is way before the great  economic collapse of 2007/2008.

A few years after getting my first mortgage, I wanted to remortgage at a lower rate. So I went to my credit union and asked to remortgage. They referred me to the investment company that bought my first  mortgage. I had to go into town at their convenience, always a hassle, to negotiate new terms. I was surprised to learn that I had to pay certain penalties for a short equity loan I had taken with another small bank in another state. I objected, asking what one had to do with the other. The larger invest company broker sidestepped the question and lectured me that I shouldn't be surprised and that I should be an informed consumer when it comes to my finances. I argued with him that I expected a certain amount honesty and expertise from all mortgage brokers, just as he would expect a certain amount of  honesty and expertise from a surgeon who was about to operate on him, as surely he couldn't possibly know all the medical things that were  about to happen to him. Mortified, I walked out of the meeting and sought to remortgage elsewhere. The next day the big investment firm called me to apologize, but it was too late.

I went to a local bank and refinanced at a lower rate. The experience was eye opening. I was treated with respect and was guided each step  of the way through the process. I was so impressed I transferred all my banking business to this bank and took advantage of their customer service and the familiarity that was building up with the personnel there who seemed to actually like working at this bank.

About two years later, the mortgage broker who helped me refinance called me up to inform me of an even better rate to refinance, and that I should come in. Also, because I had so recently refinanced, closing costs would be kept to a minimum. I couldn't believe it, but it was true and remains one of the great truths about small, well-managed banks. Over the past fifteen years this bank has wisely advised me or helped me in every financial step I have taken, from refinancing to helping me sell my house. Since selling my house, I moved to a different part of Massachusetts. Yet, I will remain loyal  to this bank until it becomes impractical to do so, which is unlikely because they have made it easy to stay with them even at a distance.

One final thought: The large mortgage investment firm that gobbled up all those small credit union mortgages went belly up in 2008 and had to be bailed out by our tax dollars. They are no longer allowed to buy mortgages. The moral to this part of story: They should have been better informed when it came to managing other people's finances.