On October 7, 2009, Richard J. Gavegnano, Chairman and CEO of East Boston Savings Bank wrote to MAHA stating that “You have my assurance that when the merger of our two institutions is finalized, East Boston Savings intends to participate in the SoftSecond program similar to Mt. Washington Cooperative Bank.”
That did not happen. In fact, East Boston Savings Bank ended its participation in the state’s most affordable mortgage program in 2010 shortly after its merger with Mt. Washington Bank was completed. Now, East Boston Savings Bank has applied for permission with banking regulators to merge with yet another Dorchester financial institution, this time Meetinghouse Bank. Meetinghouse has been a participant in the ONE Mortgage program, the successor to the SoftSecond program. ONE Mortgage is administered by the Massachusetts Housing Partnership.
Along with its predecessor, ONE Mortgage has helped more than 20,000 low- and moderate-income families buy their first home, with more than 5,000 in the city of Boston. The program was developed in 1990 by the Massachusetts Housing Partnership in collaboration with the Massachusetts Bankers Association, the Massachusetts Affordable Housing Alliance, the City of Boston and the Commonwealth in response to a Federal Reserve Bank study that found widespread racial discrimination in mortgage lending in Boston.
According to MHP, most ONE Mortgage and SoftSecond loans have been made in neighborhoods that were historically underserved by conventional credit. Forty-three percent of ONE loans have been originated in the Commonwealth’s Gateway Cities and a quarter in the City of Boston. Nearly half of all ONE and SoftSecond borrowers are households of color, and in the city of Boston, two-thirds of all ONE loans are to households of color. ONE Mortgage borrowers are good risks with the current overall delinquency rate at 3.26% (30, 60, 90+ days) and foreclosure rate at 0.82%.
MAHA has asked bank regulators to conduct a public hearing on the proposed merger between East Boston Savings Bank and Meetinghouse Bank in order to fully investigate East Boston Savings Bank’s record of serving its low- and moderate-income neighborhoods. In addition to the bank’s lack of participation in the ONE Mortgage, we have additional concerns about the loss of branches in our home neighborhood of Dorchester since East Boston will now have 4 branches within a mile radius of each other. While it may make business sense to close one of those branches, we hope that East Boston Savings will keep four Dorchester branches by relocating one in an underserved area such as Four Corners, Uphams Corner, Grove Hall or elsewhere.