Remember when banks were giving away toasters? Or maybe even a blender if you came in and opened a new account? If you had walked into an Amtrust Bank in Scottsdale, Arizona recently, you'd see plates of cookies and fruit in front of the safe and staffers like Tim Knight offering big discounts on bank-owned houses.
Branch Manager Tim Knight: Sorry to interrupt you guys. We can get back to talking and having a good time in just a second. Just want to welcome you everybody for being here. We have a great mix of folks, some real estate agents and we have some obviously interested buyers here tonight with us.
A cute frog holding house keys and a sign reading "looking for a new pad?" is the face of Amtrust's aggressive new campaign. The Cleveland-based bank got into trouble last November when the federal Office of Thrift Supervision ordered it to beef up it's finances or face sanctions or closure. Doreen Rast, an Amtrust senior regional manager, told the crowd in Arizona that events like this were part of the company's fix.
Doreen Rast: We submitted a plan and we expect to be able to be a healthy bank very, very soon and part of that is moving this bank-owned property which is why we have these events.
And Rick Sharga, vice president of marketing at the online foreclosure marketplace RealtyTrac, says Amtrust is not alone. These days, Sharga says, lenders are finding that just using a realtor or auction house to move bank-owned property isn't enough.
Rick Sharga:The banks are in almost desperate need of finding creative, new ways to dispose of the properties that they are foreclosing on now simply because of the volume.
RealtyTrac has nearly 1.8 million foreclosed properties in its database, but Sharga says over half of those are not listed in the multiple listing service realtors use. Some of these "lost" properties are new foreclosures that haven't yet hit the market but many are houses that have been de-listed after sitting on the market for months on end.
Rick Sharga: And that's a pretty significant amount of potential inventory, especially since it's distressed inventory that's just not yet incorporated into the statistics we see on an everyday basis.
Lenders are also getting creative in hopes of hooking a new customer: municipalities and non-profits flush with $4 billion in new federal dollars meant to fix up foreclosures. Cuyahoga County is considering buying 550 houses from loan servicers in a deal brokered by a new Cleveland-based company called REO Clearinghouse. Cuyahoga County Treasurer Jim Rokakis wants the properties for the county landbank, because he says he's fed up with speculators flipping cheap foreclosures.
Jim Rokakis: It's up to us to create a firewall between that group of speculators and the public. We think a Clearinghouse is the most effective way for us to get our hands on these properties.
Back in Scottsdale, Arizona, some customers seem to appreciate lenders' aggressive efforts. Potential buyer Dorothy Pierce likes that she can take a close look at the nearly dozen properties featured at the event in the Amtrust branch.
Dorothy Pierce: This, we are going right to the bank. I think this is more beneficial all the way around. We know what the bank wants, what they are willing to negotiate, and it's more efficient especially with our economy.
As for results, realtors at the event say many of the properties shown are now under contract. An Amtrust spokesperson says she's unaware of any plans to offer similar marketing events in Ohio. Many of the company's bank-owned properties are in Arizona, California and Florida.