February 11, 1994

ACCESS TO CAPITAL Fleet Loan Program Hailed; Fleet Chairman Terrence Murray Buried The Hatchet With Bruce Marks, The Boston Neighborhood Activist.

By JOHN E. MULLIGAN

As a pastor in his Jamaica, N.Y., neighorhood, Rep. Floyd Flake has repeatedly encountered the same obstacle in sponsoring would-be home buyers with poor credit: access to capital.

That may begin to change with the three-year, $ 8 billion inner city lending program that Fleet Financial Group formally unveiled yesterday with testimonials from Democrat Flake and a dozen other House and Senate members from New England and New York.

At the news conference, Fleet chairan Terrence Murray also buried the hatchet with Bruce Marks, the Boston neighborhood activist who for years has flayed the bank's lending practices in low-income communities.

For a class of customers that can't qualify for traditional mortgages, a delighted Marks said, the result is "a mortgage product that has no down payment, no closing costs, no private mortgage insurance . . . . It's not just a mortgage product, it's a whole new way of doing things."

Overall, Fleet's "INCITY" plan would make $ 8 billion available for low-and moderate-income borrowers - homebuyers as well as businesses owned by blacks, women and others long thwarted by limited access to capital.

Of that total, $ 7.2 billion over the three years would go for mortgages, home equity loans and related instruments for low- and moderate-income customers through FHA and other federally backed programs.

Fleet's volume in FHA loans last year was about $ 2 billion, said vice chairman Michael Zucchini.

One aspect of the new program is meant to sensitize Fleet employes to the needs of the inner city clientele.

Zucchini said Fleet will originate the loans with its target customers, sell them in bundles on the secondary market and continue to "service the loans" for the individual borrowers.

Some of the specific highlights of Fleet's plan:

*A $ 315 million affordable-housing program, for borrowers traditionally ineligible for traditional mortgages or government-sponsored mortgage programs.

*A related $ 140 million program for areas in Boston, New York, Washington and Hartford-Springfield, in partnership with Marks's Boston-based community group.

*A $ 15 million Fleet Community Development Corp., which Murray called the largest ever founded by a U.S. bank, to offer low-interest and interest-free loans and equity investments in small businesses in New York and New England that have trouble securing credit. These include, minority-owned enterprises whose principals have short credit histories and little business ownership experience.

*A small business micro-loan program - adding $ 90 million to an existing $ 210 million community loan program - offering loans of between $ 10,000 and $ 500,000, especially to female-owned minority-owned businesses.

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