MAHA educates and mobilizes across Massachusetts to break down barriers to affordable and sustainable homeownership.
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.
Leading community organizations today report evidence of a two-tiered mortgage market characterized by disproportionately high rates of government-backed lending in communities of color and to minority borrowers. These findings are presented in a new report, “PAYING MORE FOR THE AMERICAN DREAM VI: RACIAL DISPARITIES IN FHA/VA LENDING.”
Data from home mortgage loans originated in seven US cities in 2010 show that black and Latino borrowers and borrowers living in communities of color received government-backed loans (“GBLs”) – loans insured by the Federal Housing Administration (FHA) or guaranteed by the Department of Veterans Affairs (VA) – significantly more often than did white borrowers. Borrowers who purchased homes in communities of color received government-backed loans twice as often as borrowers in predominantly white communities. Homeowners in communities of color who refinanced their existing mortgages received government-backed loans more than three times as often as homeowners in predominantly white neighborhoods.
MAHAMassachusetts Affordable Housing Alliance
1803 Dorchester Avenue
Dorchester, MA 02124
By email: email@example.com
By phone: 617-822-9100
By fax: 617-265-7503