4 banks pool resources to offer loans to people with low, moderate incomes

June 24, 1994|By Kris Antonelli | Kris Antonelli,Staff Writer

Four Annapolis banks have pooled $2 million to form a community housing fund that would make home equity loans available to people in Annapolis with low to moderate incomes.

The loan program, designed to help people who may not qualify for traditional loans, is believed to be the first of its kind in the area, Margie H. Muller, state banking commissioner, said yesterday.

"This is being done all over the United States," she said, "but this is the first in the Annapolis area. There is a similar loan program in Western Maryland."

The loans are part of the federal Community Reinvestment Act, which requires banks to meet the credit needs of the communities they serve, said Lola Lewchuk, a compliance officer at Annapolis Bank and Trust Co.

"We want to get the money out there; we are not looking for any great profit from this," said Robert E. Henel Jr., president of the bank.

Annapolis residents with incomes of $44,100 or less can apply for a loan in about six weeks at Annapolis Bank and Trust, Farmers National Bank, Annapolis National Bank, and the Bank of Annapolis. The below-market interest rates will vary from one to two percentage points above the prime rate listed by the Wall Street Journal based on its survey of the 30 largest U.S. banks, Ms. Lewchuk said.

The rates are fixed, so "once someone gets the loan, they will always have that rate," she said. The loan amounts will range from $5,000 to $35,000.

Farmers National Bank is contributing $1 million to the fund; Annapolis Bank and Trust, $500,000; Annapolis National Bank, $250,000; and Bank of Annapolis, $250,000, Ms. Lewchuk said.

Loan applications will be reviewed by a committee made up of one representative from each bank. Any losses from defaults will be shared equally by the banks.

Before launching the program, the banks submitted it to the Antitrust Division of the U.S. Justice Department to make sure it does not violate antitrust laws.

Anne K. Bingaman, an assistant attorney general in charge of the Antitrust Division, said the department does not believe the four banks are violating any anti-trust laws because they handle only a small share of deposits in the county.

"It took several months to get the Justice Department to approve this," Ms. Lewchuk said. "They looked it over with a fine-tooth comb."

The idea for the loan program came up first about a year ago during a meeting between the Annapolis Housing Authority and bank officials, said Rick Morgan, president of Annapolis National Bank.

The Housing Authority was "concerned about what banks could do for people in the area," he said. "So we got together to pool our resources and create public awareness. None of us are the size of NationsBank, but we can pool our assets together to help."

Mr. Henel said he and other bank representatives discussed the idea with the Annapolis City Council in September. "We desperately want to make these loans, and it's not as easy as you think," he said.

Recently, he said, the bank mailed out about 1,500 applications to area residents and received two applications back.

"We approved both, but only one took the money," he said.

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