PROVIDENCE, R.I. -- An Atlanta subsidiary of Fleet Financial Group Inc. has unveiled a $38 million lending program, which will result in a $25 million charge against fourth-quarter earnings, in response to borrower complaints about high mortgage interest rates.
Customers of the unit, Fleet Finance Inc., had filed four lawsuits in Georgia, alleging that the unit violated state usury laws and other statutes covering lending practices.
Georgia state courts recently certified two of the complaints as class actions, though Fleet has asserted they are "without merit."
Reducing Mortgage Costs
Nevertheless, Fleet this week said that it would announce a "comprehensive plan to respond to appropriate borrower complaints."
Details released on Thursday included a 10-point plan that Fleet said "would significantly reduce interest rates on mortgage loans with fees and points deemed burdensome, with no cost to the customer."
Fleet did not elaborate on how much it would lower interest rates or which loans would be eligible for the reductions.
Fleet Finance also is to "place an immediate moratorium on all residential foreclosure for 60 days" and create an $8 million fund to foster housing and community development in innercity locations, including those that might be displaced by construction for the 1996 Olympics.
Fleet said it expects the program to improve its relationship with customers. The program isn't "intended to compromise or settle any pending litigation, or otherwise affect any pending litigation in any way," the banking company said.