East Boston Savings Bank Mortgage Lending Plummets After Mt. Washington Bank Acquisition

mahaadmin - Posted on 30 July 2012

Bank mergers should benefit consumers. But far too often, mergers end up just improving the bottom line for the bank.

A case in point is the 2009 merger between the larger East Boston Savings Bank and the then-struggling Mt. Washington Bank. With mortgage lending data from 2010 and 2011 now available, it is clear that lending to low- and moderate-income homeowners by the combined institution has plummeted since the merger. The banks’ lending in both Dorchester and East Boston has also dropped sharply.

Between 2009 and 2011 the EBSB/MWB merger resulted in:

• Home purchase lending to low and moderate income owner occupants declining by 40%
• Overall mortgage lending (home purchase and refinance) to low-income owner occupants declining by 54%
• Home purchase lending to owner occupants of all incomes declining by 24%

During the same period, EBSB deposits increased by 16% to $1.5 billion (as of June, 2011) and branch locations increased by 36% - from 14 to 19.

One of the reasons for the decline in mortgage lending is the decision from East Boston Savings Bank CEO Richard Gavegnano to end the bank's participation in the SoftSecond Program, the state's most affordable mortgage for low and moderate income households. Mt. Washington participated in the program up until mid-2010.

A recent analysis by the Massachusetts Housing Partnership shows that the SoftSecond program is effective in reaching underserved populations. Half of all SoftSecond homebuyers earn less than 60% of AMI and half of all program homebuyers statewide are racial minorities. In Boston, two-thirds of program homebuyers are housesholds of color. Delinquency rates for the program are lower than those for all mortgages in Massachusetts and are roughly equal to the rate for all prime mortgages.

MAHA has joined with the Allston-Brighton CDC and the Belmont Housing Trust in asking bank regulators to hold hearings on the community reinvestment record of East Boston Savings Bank before they rule on applications by the bank to open new branches in Belmont and Allston.


Massachusetts Affordable Housing Alliance
1803 Dorchester Avenue
Dorchester, MA 02124
By email:
By phone: 617-822-9100
By fax: 617-265-7503