First Place Bank seeks deeds from nonpaying borrowers

By Don Shilling

The bank hopes to sell off the increasing supply of homes that it has acquired.

WARREN — First Place Bank will continue to push borrowers who can’t pay their mortgages to turn over their deeds to the bank.

Officials prefer to take home titles quickly rather than go through lengthy foreclosure procedures, said Steven Lewis, president and chief executive of the bank’s holding company, First Place Financial Corp.

In a conference call with analysts Wednesday, Lewis said properties that go through foreclosure often deteriorate because no one is living in them and they are not producing any revenue for the Warren-based bank.

To receive title more quickly, bank officials are aggressively pushing for the cooperation of homeowners, he said.

The bank can allow borrowers to stay in the homes a little longer and waive its right to seek legal action against them, Lewis said. When mortgages are worth more than the market value of a home, the bank can seek a judgment to cover the difference. Lewis said the borrowers usually can’t pay the judgment, but the amount can stay on their credit history.

As of Dec. 31, First Place owned 96 commercial and residential properties worth $9.6 million. In the quarter that ended March 31, it added 44 properties worth $5.7 million and sold 17 properties worth $2.1 million.

Lewis said First Place officials will work to sell the properties as quickly as possible this spring and summer. He said the bank is recording 80 percent of the appraised value on its books to avoid having to take accounting losses when the homes sell.

Lewis said, however, that home values in its market areas have leveled off after suffering modest declines. He added that the Northeast Ohio market is in better shape that the Detroit area, where the bank also has a significant presence.

Lewis said he is pleased with the retail and mortgage banking operations of the bank, which reported quarterly earnings of $4.8 million Tuesday. It posted a $3.1 million loss in the previous quarter.

“Asset quality, however, is the gorilla in this environment,” he said.

Nonperforming assets, including loans that aren’t being paid and real estate owned by the bank, increased from $40.7 million June 30 to $70.7 million March 31.

Lewis said the bank has become careful in granting loans in order to improve its asset quality. In the last quarter, the bank’s mortgage portfolio fell by $54 million while its commercial loan portfolio increased by $40 million.

Lewis said the bank also has been cutting expenses by controlling overtime, eliminating temporary employees, negotiating aggressively with vendors and consolidating departments.

shilling@vindy.com