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History

The Community Investment Program

In 1989, Boston banks, like those in other parts of the country, were under attack by community groups for their outreach policies regarding inner city neighborhoods.  In Boston, a year of discord, denial and demands began with the premature release of a Federal Reserve Bank of Boston study on the effectiveness of the Community Reinvestment Act (CRA) and the Home Mortgage Disclosure Act (HMDA).  As the year progressed, there were demonstrations and sit-ins at bank branches, two other mortgage lending studies, bank application challenges and community demands.  But, it was also a year in which bankers and community representatives came together and devoted substantial amounts of time, effort and commitment to developing long-term responses to identified community needs.


By January, 1990, the Massachusetts Bankers Association was able to announce the creation of its $400 million Community Investment Program (CIP).  The CIP addressed four key areas of community concern: mortgage lending, affordable housing development, access to banking services and economic development.


Three corporations were to be formed, each with a mandate to meet specific aspects of the communities’ credit and banking needs: the Massachusetts Community & Banking Council, the Massachusetts Housing Investment Corporation and the Massachusetts Minority Enterprise Investment Corporation.  Boston-area banks also made a commitment to open nine new branches and install 32 new automated teller machines (ATMs) in the Boston neighborhoods of Dorchester, Jamaica Plain, Mattapan, Roxbury and Lower Roxbury/South End.  In addition, Boston-area banks made a $30 million commitment to below-market fixed-rate mortgages, which was not part of the original CIP.


At its inception, the Massachusetts Community & Banking Council (MCBC) was envisioned as a permanent community investment issues forum and advisory group.  MCBC was intended to assist banks with their CRA programs and address such issues as the low- and moderate-income and minority communities’ access to basic banking services, a component of which was the siting of bank branches in targeted inner city neighborhoods.  Community groups also expected the organization to monitor the progress of the CIP.  MCBC’s 18-member board would include nine bankers and nine community members.

 

The First Five Years

During the first five years of its existence, MCBC struggled in its attempts to translate a sweeping mandate into comprehensive policy initiatives.  Critics of the organization contended that its goal of creating a statewide model to address essentially local issues was from the start both unrealistic and internally inconsistent.  While at its onset MCBC had more than 150 bank members statewide, by mid-decade a severe economic downturn and bank closings had an impact.  Bankers were reluctant to support any endeavor that did not show a direct benefit to their institution or their immediate community.  While MCBC continued to receive solid support from Boston-area banks, bank membership from other areas of the state diminished and MCBC’s focus was narrowed to concentrate on Boston-oriented issues.  In addition, MCBC never performed the monitoring function that community groups hoped it would.

Still, MCBC’s record of accomplishments over this period was substantial, both in terms of concrete programs affecting the state’s low- and moderate-income population and as a mediation body whose intervention helped defuse and resolve potentially explosive disputes among bankers, government officials and inner city communities.  Among those accomplishments were: 

  • Facilitating the establishment of eight bank branches, three loan production offices and 47 ATMs in the Boston neighborhoods of Dorchester, Jamaica Plain, Mattapan, Roxbury and Lower Roxbury/South End. 
  • Developing a statewide welfare check-cashing program for welfare recipients who did not have bank accounts. 
  • Developing statewide direct deposit of welfare checks. 
  • Establishing Basic Banking for Massachusetts, with the participation of 130 Massachusetts banks. 
  • Dispute resolution during the second mortgage/home improvement scam. 
  • Creating a forum for on-going discussion of issues of common concern to the banks and the community.

In August 1995, MCBC also issued its first reports.  The first, A Progress Report: Initiatives by Massachusetts Bankers and Neighborhood Leaders to Meet Community Credit Needs, 1990-1995, was intended to serve as a report to the community on the progress of the CIP.  The report detailed significant gains in mortgage lending to low- and moderate-income homebuyers, affordable housing development and bank investments in branches and ATMs.  By May 1995, initial bank commitments of $386 million had grown to actual bank investments of over $513 million.  A companion report, Changing Patterns: Mortgage Lending in Boston, 1990-1993, showed changes in mortgage lending patterns and the lending activity of local banks.

 

MCBC’s 2000 Report

On the 10th anniversary of the CIP, MCBC produced a second report on the impact of the CIP initiatives: A Progress Report II: Initiatives by Massachusetts Bankers and Neighborhood Leaders to Meet Community Credit Needs, 1990-2000.    The report documented significant progress (along with one demise) in the CIP initiatives:

  • In 1990, Boston banks committed $52 million to the MHIC loan fund and $58 million for tax credit equity investing for affordable housing development.  By 2000, 30 banks, other financial institutions and corporations, along with Fannie Mae and Freddie Mac were participating in MHIC’s loan pool and/or Massachusetts Housing Equity Funds and MHIC had made loans totaling $209.4 million and equity investments totaling $261.6 million to 157 affordable housing projects across the state, providing more than 7,000 units of affordable housing.
  • MCBC reported that in 2000, 151 banks, representing 77 percent of all branch locations in the state, provide checking and savings accounts that met the Basic Banking for Massachusetts guidelines.
  • The SoftSecond Mortgage Loan Program, initially introduced in Boston in 1990 with commitments of $12 million from three banks, was, by 2000, available in 183 cities and towns throughout the state through 39 participating banks.  As of June 2000, $195 million in state funding had leveraged $470 million in private bank financing, providing home mortgage to more than 4,600 first-time Massachusetts homebuyers.  In Boston, More than 2,000 SoftSecond mortgage were closed between 1991 and June 2000.
  • Unable to compete with local banks that had developed programs and business units dedicated to lending to minority and inner-city businesses, the Massachusetts Minority Enterprise Investment Corporation was dissolved and its investment shifted to the Massachusetts Business Development Corporation.
  • Since 1990, initial bank commitments of $386 million to the CIP programs had grown to actual bank investments of over $1 billion.

Since both the Massachusetts Housing Investment Corporation (MHIC) and MCBC both produced annual reports on affordable housing development and mortgage lending activity, MCBC decided that its 2000 report to the community should focus instead on what had changed in the last ten years in the relationships between bankers and the community.  In their introduction, MCBC’s (bank) chairman and (community) vice chairman said “It reflects our own conviction that community development – successful, long-term community development – is as much about working relationships and shared objectives as it is about dollars.  That conclusion does not often make headlines, but we believe that it is an important change from ten years ago and one that should be recognized.”

For MCBC, those working relationships and shared objectives were developed and nurtured among those at the committee table.  MCBC’s committees – Affordable Housing, Banking Services, Economic Development and Mortgage Lending – were opened to anyone who wanted to attend.  True to MCBC’s original objective, the meetings were an opportunity to share information and experiences, identify emerging issues and develop collaborative responses.  By 2000, these included:

  • In an effort to help banks improve and expand access to basic banking products, MCBC’s Banking Services Committee distributed an information package to banks participating in the Basic Banking program.  The package included suggestions for internal training and outreach programs, along with a copy of MCBC’s first “Banking Basics” curriculum.
  • To help small business owners navigate an increasing number of lending and technical assistance programs, MCBC’s Economic Development Committee published its first Small Business Financial Resource Guide.
  • To provide information on small business lending patterns, MCBC’s Economic Development Committee published it first Patterns of Small Business Lending in Greater Boston.
  • In response to requests from both banks and community organizations, MCBC’s Mortgage Lending Committee continued to produce Changing Patterns, its report on mortgage lending patterns, on an annual basis.  Beginning in 1998, MCBC has expanded the geographic scope of the report.
  • Prompted by the findings in Changing Patterns, MCBC’s Mortgage Lending Committee formed a Task Force on Latino Mortgage Lending.  The Task Force published Expanding Homeownership Opportunities; Recommendations to Increase the Number of Latino Home Buyers, a report that included recommendations to bankers and community organizations.
  • To assist bankers, community organizations and others in referring homebuyers and homeowners to educational programs, MCBC’s Mortgage Lending Committee published its first directory of counseling programs in Greater Boston.  In 1997, MCBC expanded the directory to include programs all across the state.  In 1999, MCBC published a companion directory on foreclosure prevention counseling services.
  • To help avoid foreclosures, MCBC’s Mortgage Lending Committee worked with the Massachusetts Housing Partnership Fund to track the performance of SoftSecond Mortgage Loans.
  • In response to concerns raised by community organizations, MCBC’s Mortgage Lending Committee, in collaboration with the City of Boston, developed “Don’t Borrow Trouble,” a public awareness campaign designed to caution Massachusetts homeowners on the risks of some refinancing and home equity loan offers.  MCBC helped to launch “Don’t Borrow Trouble” campaigns in nine communities all across Massachusetts, providing over 160,000 “Don’t Borrow Trouble” brochures and posters to municipal officials, community-based organizations and banks for distribution to local homeowners.  In 2000, Freddie Mac expanded the “Don’t Borrow Trouble” program nationwide.  Since then, “Don’t Borrow Trouble” campaigns have been established in 29 cities in 21 states.

 

Old Issues/New Issues

Since 2000, MCBC’s committees, each co-chaired by a bank and a community representative, have continued to address important community credit and banking issues.  Today, over 150 bankers, community representatives, public officials and others from cities and towns in eastern Massachusetts participate in and/or receive regular information on MCBC committee activities.  A description of recent committee projects and agenda items is available in the Committees section of this website. 

Since 2000, these include: 

  • Continued promotion of Basic Banking for Massachusetts. 
  •  Continued publication of MCBC’s annual study of small business lending patterns in Boston and neighboring communities. 
  • Sponsorship of several forums on strategies to increase access to credit for small businesses and publication of Getting Credit for Business, a report on the experience and findings of the first of those meetings. 
  • Sponsorship, with the Commonwealth of Massachusetts, the Massachusetts Bankers Association and the Massachusetts Small Business Assistance Advisory Council, of Banking Partners, a new small business loan program designed to improve access to financing by very small businesses. 
  • Continued publication of Changing Patterns, MCBC’s annual report on mortgage lending patterns.  In 2008, the report was combined with MCBC’s Borrowing Trouble report on higher-cost mortgage loans to produce a single report on mortgage lending statewide.  MCBC also provided data on mortgage lending patterns in each of the state’s cities and towns on its website. 
  • Publication of Expanding Homeownership Opportunity I and II, two reports on statewide loan activity and performance of the SoftSecond™ Loan Program.  MCBC also continued to collaborate with the Massachusetts Housing Partnership (MHP) Fund to track the quarterly performance of the Loan program in an effort to identify ways that banks and community organizations can work together to avoid SoftSecond foreclosures. 
  • Partnership with the Massachusetts Bankers Association, the Massachusetts Mortgage Association, the Massachusetts Mortgage Bankers Association , the Massachusetts Credit Union League, housing and consumer advocates and others on the Massachusetts Fair Lending Task Force.  The Task Force built on the work of MCBC’s 2004 Roundtable Discussion on minority mortgage loan denials and the subsequent publication of A Look at Minority Loan Denials, a summary of the meeting discussion.  The Task Force worked to develop strategies and recommendations to assist in reducing minority denial rates and minority/white disparity ratios.  The final Massachusetts Fair Lending Task Force Report and Recommendations were presented at a Fair Lending Summit in October, 2006.  As a member of the Fair Lending Coordinating Committee, MCBC worked with the industry trade associations to plan, oversee and manage promotion of the Task Force’s recommendations.  The Committee released its final report, Expanding Fair Access to Credit, in June 2008.

Today, MCBC’s Board of Directors has been expanded from 18 to 22, with equal representation from banks and community organizations.  The geographic scope of its reports has been expanded to included statewide data to reflect its broadened constituencies.  While much has changed, some issues continue to be topics for committee concern: access to bank products and services, small business credit and fair lending.  And new issues continue to arise: declining federal support for housing, the special needs of new immigrant populations and other un-banked populations, significant increases in high-cost subprime lending. 

As it has from the beginning, MCBC will continue to look to its bank and community partners and the wide range of public and quasi-public agencies, municipal governments, community-based organizations, trade associations and advocacy groups with whom we work to continue to come together to identify these and other changing community needs and to build and rebuild partnerships and coalitions to respond to those needs.

 

Note: Complete copies of A Progress Report: Initiatives by Massachusetts Bankers and Neighborhood Leaders to Meet Community Credit Needs, 1990-1995 and A Progress Report II: Initiatives by Massachusetts Bankers and Neighborhood Leaders to Meet Community Credit Needs, 1990-2000 are available in the Report section of this website.