More than a dozen community organizations throughout the Northeast have banded together to demand that the Federal Reserve Board and the Federal Reserve Bank of Boston hold public hearings on the merger pending between Fleet Financial Group and Shawmut National Corp.
The groups represent nonprofits in Connecticut, Rhode Island, New York, New Hampshire, and Massachusetts. Dubbed the Northeast Reinvestment Alliance, the coalition will "monitor the Fleet-Shawmut merger process, share information, and seek public meetings with the Fed on lending in low- and moderate-income neighborhoods," according to Marc Draisen, president of the Massachusetts Association of Community Development Corporations.
The coalition's formation comes at a particularly touchy time for Fleet, which is once again under the spotlight for its lending practices in a poor community.
Dorchester, a mixed-income neighborhood in Boston's southeast corner, is home to about 85,000 people. Many of the buildings, particularly in its poorer areas, are two and three-family homes.
Codman Square Neighborhood Development Corp., which has a service area of two square miles in Dorchester, surveyed mortgages made there in the past 18 months.
It found that Fleet made about 20 mortgage loans in the area for $55,000 to $60,000 more than the homes were worth, said James P. Ferris, the group's executive director.
Some of the mortages were for as much as $185,000, well above local market values, he said.
The findings have not been fully analyzed, Mr. Ferris said, but they did raise eyebrows. Codman Square is investigating how Fleet made its appraisals and what types of down payments were required for the mortgages.
"Fleet is the largest lender in the neighborhood, and their loan value is averaging $20,000 to $25,000 higher than any other lender in the neighborhood," Mr. Ferris said. "That makes us suspicious."
Many of the buildings were in very poor condition "and bought at very low prices," he noted. Some of the properties "do not appear to have substantial rehab done to them."
Fleet spokesman Tom Lavelle said the bank used independent market appraisers to determine the value of the properties involved. "If something is wrong, there is nothing in it for Fleet to have an incorrect appraisal," he said. "We run the potential for absorbing that loss."
The bank has called the Codman Square group to set up a meeting to discuss the study, Mr. Lavelle added.
Meanwhile, organizations in the Northeast Reinvestment Alliance are seeking to meet individually with Fleet and Shawmut officials.
Two Boston-based groups met last week with bank executives and presented a long list of demands, including $50 million over five years in below- market-rate mortgage loans for first-time home buyers in Boston, $80 million to $90 million in loans to the Massachusetts Housing Partnership, an undisclosed amount in small business loans, and a commitment to keep branches open in low-income neighborhoods, according to Tom Callahan, director of the Massachusetts Affordable Housing Alliance.
"It is my hope and expectation that we can conclude these discussions with a signed agreement prior to the end of the month," said Mr. Draisen.
