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The Color of Money

Follow-ups and reaction

Home loan pogram gets 'mixed' review;
lending pool 'barely scratching the surface'

By Amy Wallace, The Atlanta Journal-Constitution

Published July 26, 1989, Page C1

Copyright 1989, The Atlanta Journal-Constitution

One year after nine Atlanta financial institutions pooled $20 million to provide low-interest mortgage loans, a spokesman for the group Tuesday called the loan pool's results "mixed" and lamented its limited impact.

At a news conference to assess the first year of the Atlanta Mortgage Consortium (AMC), Jim Mynatt, AMC president and first vice president at Trust Company Bank, said the program is "barely scratching the surface" of the need for affordable mortgage financing.

The AMC program, which has turned down as many applications as it has approved, still has plenty of money. But currently, Mr. Mynatt said, the program serves only a fraction of those in need and puts a heavy financial burden on some loan recipients. He said the AMC's new objective will be to seek creative financing, including federal and philanthropic funds, that could make consortium loans affordable to more people for both single-family and multifamily homes.

"The public and private sectors in Atlanta have not done as good a job as we could in leveraging our existing resources," he said. As a result, he added, "We are qualifying these families at ratios that leave little discretionary income to meet their basic needs . . . of food, clothing, transportation and education of their children. Our current program does not provide the solution to the affordable housing dilemma."

The consortium was formed in May 1988, partly in response to a series of articles in The Atlanta Journal-Constitution on racially unequal patterns in home mortgage lending. Since then, the AMC has received 551 loan applications for more than $26 million dollars, and has approved 224 loans totaling $10 million. None of the loans, apparently, are in default, and almost all are in good standing: Currently, only two mortgage loan payments are 30 days late.

The 30-year, single-family loans, which are available in targeted areas to families with annual household incomes of $33,500 or less, are now available at 9 1/4 percent interest, or nearly two percentage points below the prime rate. But housing activists say that is still prohibitively expensive.

The consortium's maximum loan is $60,000 for 30 years. At 9 1/4 percent, that loan would have an initial monthly payment of $493 before taxes and insurance.

"The people who say you can't lend money to poor people are wrong. But for a lot of the poor folks we deal with, 9 1/4 percent might as well be 50 percent," said Jon Abercrombie, a member of the AMC advisory board and the executive director of Charis Community Housing, a non-profit housing producer. "We need to get those loans down to 6 or 7 percent interest."

To do that, Mr. Mynatt said, the AMC has to change its focus. By seeking public-private partnerships and new public funds such as Community Development Block Grants, he said, the AMC hopes to subsidize loans and thus lower interest rates.

In addition, the consortium is considering branching out, both by expanding its target area -- currently focused on parts of Fulton, DeKalb, Cobb and Cherokee counties -- and by financing multifamily housing units.

Eugene H. Bowens, president of the AMC's advisory board, made clear that he believes multifamily housing should be a top priority. Mr. Mynatt, however, would not specify what types of multifamily programs are being discussed.

Mr. Mynatt also announced the appointment of the AMC's first executive director, Chuck F. Scheid III, a former account executive with Dean Witter Reynolds Inc. Chosen from a field of 15 applicants, Mr. Scheid, a resident of Grant Park, is vice chairman of the Republican Party, 5th Congressional District. He has been active in the Zoo Atlanta board and the Grant Park Neighborhood Association.

Some housing and bank officials predicted that because Mr. Scheid is white, he may encounter resistance from thevery communities he is being appointed to serve.

"There might have been a more receptive attitude in the Southside community to a black because what we've been hearing is that the majority banks are not sensitive to that community," said Ed Wood, the executive vice president of Citizens Trust Bank and an AMC board member.

The Rev. Craig W. Taylor, a housing activist and a member of the AMC advisory board, said, "I think he'll do a good job -- for the consortium. They hired their own man."


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