Communities look to NationsBank

July 10, 1993|By David Conn | David Conn,Staff Writer

Rebecca Young paid rent nearly twice as long as most people take to finish off their mortgage.

"Let's put it this way," the 78-year-old West Baltimore resident said. "I've been living in the house since I was married: Let's go back to 1939."

She's been through at least three landlords that she recalls, the latest of whom told her he wanted to sell the place more than two years ago, not long before her husband of 52 years died. "When you stay in a neighborhood so long, and you know so many people . . . ," she said, not wanting to finish the thought.

So with the help of a nonprofit neighborhood association, Mrs. Young approached Maryland National Bank about a mortgage in 1990. After two and a half years, Mrs. Young went to settlement in April on the two-story Druid Heights rowhouse she's called home for 54 years.

The best news is she now pays only about $147 a month, little more than half of her $275 rent payment. "It felt good to go to a settlement, to think you'd be owning the house yourself, and you don't need to pay the landlord anymore," Mrs. Young said. "It makes you feel good to know that somebody is on your side and thinking about you."

Rebecca Young's mortgage is the type of community investment result that has won Maryland National nearly uniform plaudits from housing officials and activists. And it's the kind of performance they hope, but aren't yet convinced, that NationsBank Corp. will continue when it buys Maryland National's parent company, MNC Financial Inc., most likely at the end of the summer.

Two weeks ago, the Charlotte, N.C.-based company sent what it considers a strong signal to Washington that it plans to do just that: NationsBank pledged to lend at least $600 million in Washington's low- and moderate-income neighborhoods during the next decade.

Washington, unlike any of the states, requires out-of-state banks to ante up with a specific community investment plan before they're allowed to enter the District. By contrast, the federal Community Reinvestment Act -- which few banks have ever failed to satisfy -- requires banks merely to meet the credit needs across the communities they serve.

Still, in 1991, when the former NCNB Corp.'s acquisition of Atlanta-based C&S/Sovran Corp. created NationsBank, the company publicly pledged to make $10 billion in community investment loans in all of its markets over 10 years. In the first year, NationsBank said it made $2.2 billion in loans under the program.

Despite the volume of zeros behind those promises, the reaction from those who hope to benefit from NationsBank's citizenship in Baltimore has been muted. Though it promises to be the best corporate citizen in town -- better even than Maryland National at its peak in the late 1980s -- NationsBank won't commit to a specific amount of community investment activity in Baltimore.

As importantly, it's not exactly clear what NationsBank means when it talks about community investment. For instance, a summary of what the $10 billion program has achieved so far in Maryland shows NationsBank made 12 business loans, totaling $47.5 million, in low- to moderate-income neighborhoods last year. But how many of those were to big businesses that happened to be in low-income areas?

Likewise, NationsBank says it made 260 housing-related loans in low- to moderate-income census tracts in 1992. But some of that went toward home-improvement loans, activists point out, which are important but not nearly as critical as mortgage money.

As for the business loans, less than 10 percent were in excess of $1 million, according to Sally Barley, a senior vice president in Baltimore, and none of the corporate borrowers had more than $100 million in annual sales. She said NationsBank includes the bigger companies in its community investment numbers because their contributions to economic growth "are critical" to the low-income areas where they operate.

And while it's true that 40 percent of the housing-related loans were for home improvements, more than 90 percent of the dollars lent was for mortgages, Ms. Barley said.

The 1980s were hard on those who need affordable housing. A 1991 study by a Washington research group showed that four out of five poor households in the Baltimore area paid more than 30 percent of their income for housing (the federal "affordability" standard), and that poor households in Baltimore remain on waiting lists for 10 years to receive subsidized housing. The city said more than 35,000 households were on the waiting list that year.

"I'm not at all impressed" by NationsBank's pledges, said Ruth Crystal, executive director of the Maryland Low Income Housing Coalition and Information Service. "My question is, are they going to make products those residents can use?"

"It's nice to talk about pie-in-the-sky money that you might get sometime down the road," said Daniel P. Henson III, commissioner of Baltimore's Department of Housing and Community Development.

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