Atlanta's largest banks plan to announce today programs for lending at least $65 million at low interest rates for home purchases and home improvements, particularly on the metro area's black Southside.
The programs are the first specific bank responses to a firestorm of protest over disclosures of unequal patterns of home loans to blacks and whites. The patterns were described in "The Color of Money," a series of articles last week in The Atlanta Journal-Constitution.
Banking officials outlined the programs, which will be announced at a press conference with the City Council this morning:
A $20 million loan pool from at least eight banks and savings institutions, with low interest rates and relaxed credit requirements, in targeted working-class neighborhoods. All lenders in the metro area have been invited to participate.
A $25 million commitment for low-interest loans from Citizens and Southern Bank (C&S). This program would include $10 million for home-purchase loans and $15 million for home-improvement loans, at low interest rates and low closing costs, to families with incomes of $35,000 or less who live in any area.
A $10 million commitment for low-interest loans from First Atlanta Bank, at low interest rates and low closing costs, for home-purchase and home-improvement loans to families with incomes of $30,000 or less in specific working-class neighborhoods.
A similar $10 million program from Trust Company Bank, which also is making the largest commitment to the loan pool.
Several banks -- C&S, First Atlanta and perhaps others -- will make changes in loan operations, including acceptance of loan applications in Southside branches, expanded hours for Southside branches, increased solicitation of real estate agents who work in black and integrated areas, increased use of government-backed loan programs and more advertising of bank loan programs.
At least two banks plan to "adopt" Southside neighborhoods, making $200-a-month grants to police officers who choose to live in these neighborhoods and offering financial counseling for homebuyers.
The announcements come in the wake of another wave of protest Thursday over the lending issue.
At noon Thursday, guests at the annual awards luncheon of the Atlanta Business League, a black group, were handed brochures protesting their giving an award to the head of Trust Company Bank.
At 12:30, about 30 demonstrators crashed the annual stockholders meeting of the Federal Home Loan Bank of Atlanta, which regulates savings institutions.
And at 2 p.m., the Southern Christian Leadership Conference, black ministers and housing advocates held a news conference at the Federal Reserve Bank of Atlanta to call for congressional hearings and a Justice Department investigation.
The $20 million loan pool, called the Atlanta Mortgage Consortium, is an expansion of a $10 million pool that lenders have discussed for nearly a year. The effort was led by Trust Company Bank after the bank was accused of redlining in a legal challenge filed by a coalition of neighborhood groups, the Atlanta Community Reinvestment Alliance.
Participating lenders include Bank South, C&S (which had dropped out of the earlier pool), Citizens Trust Bank, First American Bank, First Atlanta, First Union Bank, Georgia Federal Bank and Trust Company Bank, according to documents obtained Thursday by the Journal-Constitution. Banking officials said other lenders may be added.
The pool would make 30-year, fixed-rate loans for 97 percent of appraised value, with no private mortgage insurance required. Interest rates would be from half a point to 1 1/2 points below market rates, with no discount points charged.
"Our members recognize that to be effective in a rising interest rate environment, the consortium may have to consider larger discounts to keep our rates within this general range," Trust Company's Jim Mynatt said in a press release prepared for today's announcement.
Credit rules, such as the proportion of income allocated to debt payments, would be more liberal than usual, and "an active effort will be made to confirm good credit through timely utility bill and rent payment history where more conventional credit records may be unavailable," the document said. "Sweat equity," in which a homebuyer improves a property in lieu of part or all of a down payment, will be allowed, as will the use of gift money for down payment.
The program will be in place within 30 days through individual lenders, although the lenders plan to set up another entity, a community development corporation, when they receive regulatory approval. Eventually this corporation might make loans for multifamily housing, might sponsor or finance demonstration housing projects, commercial redevelopment or other projects, the document said. The corporation might also work with government agencies to further reduce interest rates.
Banks plan to announce additional details of their programs this morning. City Council President Marvin Arrington also has said he will announce the members of a special "action committee," made up of bankers, citizens and public officials, at the 10 a.m. news conference at First Atlanta.
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