Fifth Third Takes Active Lending Role

Fifth Third Bancorp's (FITB) stock may be at a 52-week low, but the bank is stepping up efforts to help solve the crisis in the U.S. housing market.

The Cincinnati-based financial institution, like other lenders, has a large inventory of foreclosed houses on its hands as the result of borrower defaults on mortgages. These homes, called REO (real estate owned), are ones that have gone back to bank ownership because they were not sold at foreclosure auctions.

What sets Fifth Third apart from other financial institutions with significant REO inventory is the aggressive way in which the bank is making mortgages available to buyers of these REO homes.

The readily available financing is allowing realtors to move homes more easily, especially in distressed markets such as Florida, where foreclosures are rampant.

"Other banks are not talking about mortgages," says Mike Morgan, a real estate broker and housing consultant who heads Morgan Florida. "Here is Fifth Third saying 'come to us for a mortgage.'"

"Other banks, when we talk to them about mortgages, we get a runaround," Morgan says.

Kitchen-to-Kitchen Marketing

Fifth Third has about 1,700 homes it owns through foreclosure across the U.S., with the bulk of the inventory in Florida, Ohio and Michigan. In May, the bank instituted a policy that began requiring realtors to put flyers in the kitchens of these homes, advertising the mortgage financing options it was willing to provide to homebuyers.