Fleet/Norstar Slates $111 Million For Massachusetts CRA Program
Under pressure from community groups after winning Bank of New England's franchise, Fleet/Norstar Financial Group Inc. last week unveiled at $111 million community reinvestment program for Massachusetts.
Community activists and the region's press have assailed Rhode Island-based Fleet and the failed Bank of New England for their relationships with mortgage companies that allegedly charged high interest rates to low-income borrowers.
The two banks lent money to these companies, which in turn make second mortgages.
H. Jay Sarles, executive vice president of Fleet/Norstar, said high-rate second mortgages are "an industrywide issue. We have a small exposure.
Part of Fleet's commitment - $11 million - will be used to lower interest rates on these second mortgages and provide relief for borrowers.
Charles Stith, president of Boston-based Organization for New Equality, a nonprofit group, is generally satisfied with Fleet's assistance plan. "It seems to get to all of the folks who were exploited," he said.
The bulk of Fleet's commitment - $98 million - will be earmarked for loans to low-income people for purchasing and renovating houses, starting or improving small businesses, and funding nonprofit agencies.
In addition, Fleet will add a branch, a loan production office, and two automated teller machines in minority neighborhoods in Boston.
Connecticut Plan Next
Mr. Sarles said the banking company plans to announce a community reinvestment plan for Connecticut by yearend.
The Massachusetts plan was released first because of community concern about Fleet's commitment to the Community Reinvestment Act. "It became important to get it out," Mr. Sarles said.
Fleet has earned outstanding CRA ratings for its Rhode Island and Maine subsidiaries, while its Buffalo, N.Y.-based bank garnered a satisfactory rating.