May 8, 2002

Fleet Will Set $200m For Loan Program Activist Group Will Screen Applicants For Lower Mortgage Rates

By Scott Bernard Nelson

Once upon a time, Neighborhood Assistance Corp. of America sent out waves of protesters with bullhorns from its converted warehouse in Jamaica Plain, shaming banks into giving millions of dollars for low-income mortgage programs. These days, it manages a $4.3 billion portfolio of mortgage loans and simply negotiates deals with the country's biggest banks.

Today, NACA will announce the latest fruits of its negotiating labor: an agreement with FleetBoston Financial Corp., in which New England's biggest bank will contribute $200 million to NACA's efforts. The deal is considerably smaller than a $3 billion nationwide contribution from Bank of America Corp. in 1999, but it is the biggest single contribution from a bank in NACA's home region.

"We're talking about 2,000 families that will become homeowners and will be stabilizing their families who wouldn't ordinarily have the opportunity," said NACA's chief executive, Bruce Marks. "It's a huge agreement in that it involves Fleet, which is the dominant lending force within New England."

The bank will dole out the money in mortgage loans to low- and moderate-income residents of Massachusetts and Connecticut who are buying houses in low- and moderate-income neighborhoods. NACA will screen the applicants, and help those who pass muster get through the application process.

In exchange for all the application work being lifted off its shoulders, Fleet will provide mortgages at interest rates 1 percentage point lower than the prevailing rate at the time of the loan - currently 6 percent on 30-year loans, and 5.75 percent on 15-year loans.

Borrowers can "buy down" the interest rate even more at a cost of 1 percent of the loan amount for every 0.25 percentage points dropped. The bank will also waive closing costs and doesn't require a down payment.

The typical mandate that borrowers carry private mortgage insurance until they build up 20 percent equity in the home is scrapped, too. (Borrowers do have to join NACA's Neighborhood Stabilization Fund, for $50 a month over the first five years of the loan and provides temporary subsidization in emergencies. Marks said NACA will open two new offices to help administer the program, one in Western Massachusetts and another in New Haven.

The deal highlights a side of NACA that many don't know exists. Marks likes to call himself a "bank terrorist," and NACA is best known in Boston for clashing with police outside of Fleet meetings, shouting down speakers, and instigating class-action lawsuits. Last month, though, Marks and his yellow-shirted protesters were noticeably absent from the bank's annual meeting at World Trade Center Boston.

"Fleet has been able to see past our past antagonism, our past battles, to do the right thing," Marks said yesterday. "In Mass., in this time of budget cuts, when affordable housing programs are being decimated, you've got NACA and Fleet as a private-sector initiative, filling the void."

Fleet actually gave NACA its start in mortgage lending in 1995, when it blinked in a stare-down with Marks-inspired protesters and agreed to pay the organization $140 million (Bank of Boston, since acquired by Fleet, gave another $75 million) to administer a loan program. Since then, NACA has also moved into mortgage counseling and opened 26 offices around the country to help low-income people get loans.

"Fleet partners with numerous community organizations to meet our affordable housing commitment," said bank spokesman James Mahoney. "We're pleased to continue working with NACA."

Marks said NACA has helped more than 11,000 families get mortgages, 3,500 of them in Massachusetts.

In December 2000, Marks announced a $300 million local deal with Bank of America. Bank of America provided the cash, and NACA agreed to supply the legwork. Combined, the organizations hoped to get 2,500 Bay State families into homes.

The program was part of a previously announced $3 billion deal between NACA and the North Carolina-based bank that covered other regions of the country.

This article is reprinted here for non-commercial, educational, fair use purposes only.