toledoblade.com --

In moves to rev up business stalled by the national housing and credit crises, some Toledo area banks are offering discounts on mortgages.

Charter One Bank has a temporary plan to reduce finance charges on home equity loans and Fifth Third Bank is cutting closing costs on mortgages.

One industry expert praised the discounts, comparing Charter One's program to employee discount incentives offered by ailing Detroit Three automakers.

"I would look at this on the positive side, that banks are trying to attract eligible borrowers," Jeff Wherry, executive director of the Ohio Mortgage Bankers Association, said. "We've got to get the economy rolling in Ohio again. It's been dismal for so long and we can't continue to have this migration of people out of the state."

The unsteady housing market has created a sort of renaissance culture for banks, which are boosting consumer incentives in order to compete, said Karen Dorway, president of BauerFinancial Inc., of Coral Gables, Fla., a financial institutions research firm.

"The whole industry is kind of rewriting itself right now," she said.

Nationally, home loans slowed during the last year as foreclosures soared and house values slumped. Loans are key for banks, bringing in money through finance charges.

Ohio and Michigan have been among the nation's leaders in foreclosures.

In northwest Ohio, house sales slipped to 572 in August, down from 786 a year ago, according to the Toledo Board of Realtors.

Charter One is offering any customer its employee discount, which chops 0.5 percentage point from interest rates for new home equity loans,and $250 off mortgage closing costs, until Oct. 10.

Bank officials did not return calls for comment.

Fifth Third last week announced reduced mortgage closing costs for first-time buyers through Dec. 31.

The bank is offering up to $750 off closing costs, or 10 percent of the buyer's tax credit provided by the federal Housing and Economic Recovery Act.

The bank, one of the largest in metro Toledo, hopes to "supersize" the incentives in July's housing act, said Elizabeth Kollar, senior vice president of consumer lending.

"I think it took until about last week for the public to really notice the program," she said, adding that applications are now steady again after a lull that was reflected in the bank's second-quarter loss of $202 million. "This is a positive in the midst of a lot of craziness."

Genoa Bank and National Bank of Oak Harbor have a history of waiving closing costs on mortgages, saving buyers thousands of dollars.

This summer, State Bank and Trust Co., a Defiance bank with metro Toledo branches, created a program to entice first-time buyers to consider fixer-uppers by giving breaks for home-repair loans, said Pam Benedict, senior vice president and real estate sales manager.

But the lending crisis nationally has led to tighter restrictions by banks. Bank of Maumee last week capped mortgage loans at 80 percent of a house's value, compared with 90 percent previously, said President Lee Dunn said.

"We're very lucky we have no delinquency at all in our home equity lines of credit," Mr. Dunn said, "which is reassuring in this environment. People are paying their bills on time."

Contact Bridget Tharp at:
btharp@theblade.com
or 419-724-6061.

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