Writer: Joshua Andino
2 min read March 2023— While the financial industry continues to change, cfsbank’s owner-builder lending program has reinforced community relationships while offering an innovative avenue for business development.
As the banking and financial services landscape continues to consolidate and the macroeconomic environment shifts in the midst of interest rate hikes and inflationary concerns that have made homeownership a challenging prospect for many across the country, at the community level, some banks have found the sweet spot between leveraging personal touch and innovative product offerings to further develop their respective businesses while providing strong local support.
“Community banks such as cfsbank, can be more flexible than our larger national counterparts when it comes to lending. This is partially due to the deep ties and commitment we have to the communities we serve. Because our bank is staffed by people that live locally, we are more in tune with the plights or needs of that community,” explained Danielle Maurer, chief retail officer for Charleroi-based cfsbank, on the bank’s innovative owner-builder loan program that allows borrowers to act as their own general contractor, and even count expenses towards the loan.
Scott Delano, loan officer for the bank and manager of its Seven Fields Branch, further explained that, “During the construction phase, any construction bills, invoices or material purchase reimbursements will be paid out weekly, as opposed to similar companies who pay out invoices on a monthly schedule.”
That flexibility means that community members and local homebuilders are more involved in the projects they pursue, with individuals free to build the house themselves, should they choose to do so. “When building their home, the borrower takes on the role of a general contractor. They handle the design, planning, scheduling and management for the construction of their own house,” Maurer said. “It makes building your dream home even more special.”
The program has helped fuel cfsbank’s growth across the region, and accounts for approximately 30-35% of the bank’s overall residential lending, explained James Safin, cfsbank’s vice president of mortgage lending. Borrowers are given 12 months to work and finish construction, during which they can take advantage of the loan’s interest-only payments before converting to a more traditional mortgage, with terms available up to 30 years and a fixed rate. Costs are generally reduced, with borrowers purchasing materials directly as opposed to through an intermediary. Cost efficiency and flexibility have made the program a success, leading to added business, explained Safin. “Our unique and flexible program has allowed cfsbank to be a leader in construction financing and grow our loan portfolio. It has often led to deeper relationships and repeat business with our customers through home equity loans to finish basements, landscape, and other similar projects,” he said.
Safin explained that clients have also referred family, friends and business associates to the bank for its tailored approach, exemplifying the unique role community banks play in local business and community development. Larger banks, dealing with thousands of clients and increasingly automating processes away, fail to offer the support institutions such as cfsbank has become known for.
Maurer highlighted the difference in approach in her own statement, saying, “At a large bank, mortgage decisions are often based on a formula created by some unknown individual at a headquartered location. At cfsbank, underwriting is a local decision, made by people who live in the community and often know the mortgage applicant personally. Our loan officers are familiar with the customer’s financial history, family life, and any special circumstances that might affect the loan, and there’s more flexibility to say ‘yes’ to special circumstances.”
As it stands, the program provides a model for high-touch, high-contact banks to leverage their local presence into an effective avenue for business. cfsbank, demonstrating its commitment to Pennsylvania, requires applicants to be a state resident and is working on ensuring its customers are aware of the unique lending it offers.
Maurer explained that despite the requirements, people remain interested in the program, stating, “With our Owner Builder Construction mortgages a somewhat unique product that we offer, we receive inquiries, almost daily, from potential customers outside of our footprint that are interested in our owner builder mortgage loans.” Ultimately, the program was designed with community as its focus, she added, “Our success is intertwined with the success of the markets we serve. If the community thrives, so does the bank and a solid foundation of home ownership is an important element of any community’s success.”
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