What happened? While it would be easy to point fingers at PNC Bank, given the well documented story the Wills have courageously provided, the fact remains that since the bank has not shared their methodology in making their decision to call the Wills’ notes, we will never have a full picture of how just or unjust PNC has been in this case.
Truth be told, all banks, whether they be community-based or national chains, use approximately the same system of metrics in determining the viability of a borrowers debt capacity. Whether these sterile “decision trees” are the best models for loan decisions needs to be debated another time, but the fact remains that a beloved family in our community is facing certain, and perhaps terminal, financial peril, despite their history of paying their loans on time and running a well regarded business.
The use of “best practices” in determining risk in lending may be universal, but there remains a critically important difference that separates community banks from nationally controlled ones: a town sidewalk. A loan officer in Pittsburgh can calculate the Wills’ fate on a spreadsheet, turn off his computer and head off to a suburban Olive Garden and never face those whose future on which he has just passed judgment. The loan officers in our local community banks don’t have it so easy.
Bank presidents like Tom Stevenson at Peoples or James Anthony at Chesapeake Bank may indeed use the same spreadsheet programs as PNC, but at the end of their day, they could easily run into the Will family on the sidewalk, while picking up their kids at school, or in line at the local food store. They may or may not factor in their personal discomfort in calling a loan, but given the personal knowledge they may have, they have additional calculations to make that the loan officer in Pittsburgh does not. They will know something of the value a family like the Wills adds to the community.
While this difference doesn’t necessarily mean a local bank wouldn’t come to the same decision on the Wills’ loans as PNC, this additional, if slightly less easily calibrated factor of community value, is a missing ingredient in the calculations of large national banks. No one in Pittsburgh, or in whatever location these decisions are made, would consider, or even be aware of, the Wills contributions to the community.
In many ways, almost anyone could face the same fate as Herb and Christine. An indifferent bank bureaucrat in some large city, far, far away from High Street makes a life-altering decision on your home or business. They have no information about your role in the community, what your children’s first names are, or how your store fills an important gap in the area. This is a dangerous and fatal flaw in the national bank chains’ business model. It is hoped that they reconsider their approach.
The future of the Wills remains uncertain, but the community feels the pain for this young family. As with most tragic events in small towns, Chestertown collectively hurts for Herb and Christine. At this moment, we are all Herbs.
Chestertown citizen says
Unless a local bank steps forward to help, I can’t help but feel we are “piling on” PNC. I agree they likely all “use the same spreadsheets”. I certainly am not a PNC cheerleader, but I am for fair play. Unless a local bank acts differently, it may not be fair to single out PNC as an evil big bank. While it may make a local bank president uncomfortable to turn down a local citizen for a loan, that doesn’t seem to have changed the outcome: no help for Herb & Christine.
Daniel Menefee says
Chestertown Citizen,
I am going to single out PNC as “evil.” When was the last time you heard of People’s, CNB. or CBT calling a loan with a PERFECT PAYMENT HISTORY? I’ll give $10.00 today if you can find me one local banking customer who has been called, when they’ve never missed a single solitary payment on a loan. Show me the proof and I’ll hand deliver you both $10.00.
The big difference here, and for many others like the Wills, is that the giant socialized banks of 2008, with their regulated mandates, suddenly changed the rules on risk and tied risk heavily to the new volatilities in the real estate markets, which were in part created by the same bank seeking to call the Will’s loans.
The current correction that has taken place since the sub-prime mess of 2008 has put all homeowners with a balloon at risk.
The Wills signed a balloon note with understanding their loan would be re-set for good payment performance, and no borrower signed onto a balloon before the subprime mess of 2008 knowing real estate fluctuations could kill their loan at maturity. This historical precedent of having good loans reset at maturity is as much a social contract as it is a business agreement.
Most homeowners, especially in a community like Chestertown, are not real estate speculators, we are here for the long term to build a life and be engaged citizens. This doesn’t mean we don’t see our home as a long-term investment, but we shouldn’t have to watch real estate fluctuations on a weekly basis like the NYSE ticker.
Living in fear of market fluctuations is no way to live- knowing your bank can one day call and say, “home values on your street have dipped a little so we need to call your loan.”
Banks have historically reset balloons at maturity for responsible borrowers- based on their credit worthiness. The whole idea of a balloon was never to collect the full amount at maturity, but to reset the loan at the current market interest rate that was fair to both lender and borrower..That is what most borrowers have come to understand in the American system of banking. There are very few people who can pay off their home loan next week.
Anonymous says
Shame on you PNC. Business might be business but ethics should always take the high road.
By the way, the Rock Hall branch of PNC closed on Friday, 3/18/11; not a big enough town in which to do business, I guess.
Observer says
A good local banker would be able to do what used to be referred to as”creative financing” by issuing a new mortgage based on the assessed value of the property offered as collateral, and then a personal loan or a second mortgage which, when combined, should result in payments within the reasonable reach of the borrowers. This is a relatively straight-forward process that allows fiscally responsible homeowners/business owners to keep their finances well grounded in the community. Where are the Jesse Cunninghams of the Chestertown banking establishment today, when they are needed?
Terry Nelson says
I know this family also. While I have no knowledge of how the banks come to such decisions, I strongly believe in the saying “Where there’s a will, there’s a way!” Would there be any sense to setting up a fund, say, at the People’s Bank to help them out? I don’t have much and I don’t know the extent of the loan but I could do without some things to contribute to this cause. This family and business are worth going the extra mile for. They are real people with real values and exceptional work ethics. They are my idea of what real representatives of this great country we live in are like!
Anonymous 2 says
https://lmgtfy.com/?q=PNC+lawsuits
JOURNALIST says
If PNC stood for “People of North Chestertown,” would some of you be so outraged? I fear the reaction about PNC Bank stems in great measure from the fact that it is a “foreign-held” bank, i.e. it’s not a Kent County institution. Wake up, folks. The economy such as it is, is a global economy. If you want to get angry at some banks, do rent “Inside Job” about how the 2008 financial meltdown and the players in Washington, including former Presidents Bush and Clinton, Alan Greenspan, etc. etc., screwed the economy of our country, the effects of which I am afraid have trickled all the way down to Kent County and sadly, some of its finest residents.
Steve Payne says
Please do rent Inside Job. What you will hear there, and everywhere else, is that the Wall street firms and the banks and other lenders pushed deregulation through Washington which allowed them to create new financial instruments and get involved in mortgage lending in new ways. The government went along with it and the fed continued policies that would pump up the economy. The movie and the financial studies etc concluded that the financial firms blew up the economy and they were able to because the government didn’t regulate them enough.
And yes, it has come here and everywhere and affected everyone.
Richard Wessel says
It can hardly be expected to receive fair treatment from a centuries old institution as immoral as that of fractional reserve banking. Any other type of business that engages in such practices would be prosecuted for fraud. Yes the local banks would have a more neighborly touch, but at the end of the day a banker lends money by making an entry in a ledger. No skin of his is put in the game. Anyone who doubts this is invited to research “fractional reserve banking”. The borrower will put years of real labor toward paying back a debt of money, plus interest, that doesn’t even truly exist other than as bits in a computer mainframe. The bulk of that will not appear as the paper coupons improperly called dollars. The lender did not break a sweat in his air conditioned office. They need only write a check on themselves to purchase the world. There is a reason that, all to rare, statesmen like Thomas Jefferson and Andrew Jackson fought the practice of politically privileged banking.
Until this practice is abolished no amount of regulation will amount to anything.
gerry maynes says
It is interesting that banks that caused the mess that we are all in and after receiving government funding so that they could make loans to small business people. ( They havenT and have chose to use these funds to beef up their ledger books) These hypocrites are sitting in judgement of honest people who pay their bills and who!s only problem is that their property has fallen in value do to the situation caused by theses banking pin heads them selves. Namely the recession .
If it was not life or death for these fine people, the whole thing would be comical. Instead if its not criminal ( thanks to our politicians who wrote the bail out law and did not force the banks to circulate this money) its simply immoral. A Pox on PNC!s house!