Ohio Lender Aggressively Pushing "Deeds In Lieu" Policy To Avoid Costly Foreclosure Proceedings

In Warren, Ohio, the Tribune Chronicle reports:

• [F]irst Place [Financial Corp.] is trying a ‘‘deeds in lieu of foreclosure’’ policy that can help ease a tough situation for both lender and borrower, [chief executive Steven] Lewis told analysts Wednesday [...]. ‘‘Getting deeds in lieu of foreclosure is a common practice. We’ve been a bit more aggressive in bringing it as an alternative to borrowers,’’ Lewis said.

• The practice calls for borrowers who are facing foreclosure to turn the deed to their house over to the bank. Borrowers gain by avoiding a potential ‘‘deficiency judgment’’ — the difference between what they owe and what their house is worth — that would stay on their credit forever, Lewis said. [...] Waiving the bank’s right to a deficiency judgment is a ‘‘pretty powerful’’ argument to convince borrowers to turn over their deed, Lewis said, adding the owners may be able to stay in the property a little longer.

• One downside for the bank is it has to take charges against the amount of deficiency value it doesn’t receive, but Lewis noted in most cases the bank doesn’t get anything from it anyway.

For the story, see First Place meets crisis by accepting deeds, not foreclosing.

See also, Youngstown Vindicator: First Place Bank seeks deeds from nonpaying borrowers.