Ending a seven-month battle with a community group, First Union Corp. agreed Thursday to make $150 million in no-down-payment, no-closing-cost loans to low-income consumers.
The program, the second-largest pledge of its kind, is expected to fund more than 2,000 mortgages for families in South Carolina and Georgia.
The deal marks a major reversal in relations between the Neighborhood Assistance Corp. of America and First Union.
"This is a huge commitment," Neighborhood Assistance president Bruce Marks said. "This revolutionizes access to homeownership for working people."
The group also unsuccessfully sued to block First Union's 1995 merger with First Fidelity Bancorp, and it picketed First Union chairman Edward Crutchfield's home.
The Boston-based housing advocacy group repeatedly has protested the Charlotte-based bank, including disrupting a shareholders meeting last year.
Mr. Marks said he plays hardball to get a bank's attention. "They might not like the tactics," he said, "but we get the job done."
The Federal National Mortgage Association is Neighborhood Assistance's next target, Mr. Marks said.
Fannie Mae, he said, refuses to buy these no-down-payment, no-closing- cost loans from banks. That's preventing the program from becoming a national standard, he said.
"Banks have stepped up the plate and done the right thing," Mr. Marks said. "Now a government-subsidized entity has become the roadblock."
Neighborhood Assistance will attempt to disrupt Fannie Mae's annual meeting next week in Dallas, Mr. Marks said.
First Union is far from the first bank to negotiate with Neighborhood Assistance. The group has worked out financing agreements with NationsBank Corp., Fleet Financial Group, Bank of Boston, Barnett Banks Inc., and Mellon Bank Corp.
In the agreement with First Union, Neighborhood Assistance will identify borrowers, provide credit counseling, and offer support services to customers after they close the loan.
"We feel the $150 million is a significant commitment," First Union spokesman Jeep Bryant said. "As the program develops, it could be expanded to other communities."
First Union, Mr. Bryant said, is not worried about the quality of these loans, noting that the other banks have experienced extremely low default rates.
