PLATTSBURGH -- The subprime mortgage crisis has struck a glancing blow at the North Country, nudging down home values and requiring that borrowers "get more skin in the game."

If the storm can be weathered, however, the silver lining may be that lenders who engage in solid lending practices may be strengthened and more homeowners will wind up with houses they can comfortably afford.

"I think to some degree, it's helped some of the local community banks here," said Jon Cooper, president and CEO of Champlain National Bank.

Rather than bundling all its mortgages up and selling them to the secondary market, he said, Champlain National keeps about 65 percent of them locally. "We keep a preponderance of mortgages on our balance sheet," he said.

On a national and global level, the subprime mortgage crisis was created when large investors began looking for new opportunities in the late 1990s. Secured mortgages were seen as very safe bet, and a demand developed for large quantities of them bundled together into investment instruments.

To satisfy this need, mortgage writers were pressured to produce more and more of them, and some began lending to buyers with poor credit and inadequate income. It was assumed that housing values would keep going up, so even if these buyers defaulted the home could be foreclosed on and investors would still make their profit.

Complex new loan products were created with low teaser rates that adjusted higher as time went on, and down payments and closing costs were reduced or not required at all as competition grew, and many people wound up with homes they couldn't afford. Credit problems of consumers were ignored, and incomes of buyers sometimes weren't even verified.

The problem was most acute in high-population, fast-growing states such as California, Nevada, Arizona and Florida. In one example from the West Coast, a payment on a half-million-dollar home started at $1,500 a month, but later adjusted upward to $7,000 monthly.

The bubble burst when housing prices stopped increasing and began to retreat, leaving homeowners with a mortgage that was higher than the value of their home. As their interest rates adjusted upward and their payments became unaffordable, many were unable to sell, so they simply defaulted and walked away leaving investors in mortgage-backed securities around the world with billions of dollars in losses.

Cooper said the problem was most acute in high-population areas of heavy overbuilding and speculation where investors would buy a house or condo expecting to "flip it" in a year or two to make a substantial profit.

In the North Country, this hasn't been as much of a problem, Cooper said, although he has seen the market soften in areas with a speculative nature such as the condo and second-home markets around Lake Placid.

Buyers in the North Country, he said, are most concerned about taking on a reliable fixed payment so they know they'll be able to stay in their home for the long run. "I haven't seen delinquencies rise to anything that's really meaningful," Cooper said. "We haven't adjusted our lending standards."

His advice to borrowers is this: Understand your mortgage and pick a payment that's affordable, even when life's financial obstacles arise, especially if you're planning to stay in the home for the long haul. "Be sure you understand the contract," he said, "how rates adjust and who you're working with."

In smaller communities such as the North Country, he said, bankers who want to stay in business can't afford to make unsound loans. "If you get a bad reputation in the North Country, you can't survive," he said, adding that bankers are often high-profile members of the community serving on boards and attending the same churches, shopping in the same stores and going to the same events as their clients.

This isn't to say there hasn't been an impact on the bank. Champlain National does sell some loans on the secondary mortgage market and conditions there have become a lot tighter. "Some of the guidelines we've seen have become a little more conservative," he said. "But it's nothing that's preventing us from doing business in the North Country."