Supporting housing helps banks keep R.I. growing

By Justin Sayles, Staff Writer

A marriage often leads to the purchase of a first home. In the case of Bank Rhode Island and Rhode Island Housing, their marriage under the auspices of Priority Mortgage Services has led to the purchase of many first homes.
Started last year, the partnership involves BankRI issuing loans and Rhode Island Housing handling the underwriting, closing services and consumer education. The program won an award for innovation from the National Council of State Housing Agencies.
“We need partners to make first-time homebuyers aware that this help is out there,” said Chris Barnett, spokesman for Rhode Island Housing. “We come together not only to fulfill our needs, but also to serve Rhode Island’s housing needs better.”
In recent years, as concern has grown about the affordability of housing in Rhode Island, banks have become more and more involved in addressing the issue, working on everything from loan programs to studies and policy analyses, such as one sponsored by the former Fleet Bank in 2004.
On the lending front, Thomas Hogg, chief financial officer at Rhode Island Housing, said a partnership with 35 banks has enabled the agency’s First Homes program to offer low-cost financing for qualifying first-time homebuyers.
First Homes gives consumers low-interest loans with the option of 30-year or 40-year terms. About 1,500 loans are issued through the program each year. Though originated by the banks, they are financed by Rhode Island Housing, which has the “ability to raise low-cost money,” Hogg said.
Separately, at Sovereign Bank, spokesman Dennis J. Murphy said the bank offers qualified consumers mortgages with rates a half-point below the market rate. Sovereign also hosts “pre-qualification nights,” he said, during which consumers looking to purchase their first home can be set up, on the spot, with a real estate agent offering a home in their price range.
On the development front, Citizens Bank took the lead in 2004 with the creation of its “Citizens Housing Bank.”
The $200 million loan program, offering low-interest money to nonprofit developers in Massachusetts, Connecticut, New Hampshire and Rhode Island, aimed to help create 1,200 new housing units. Jeanne Cola, senior vice president and director of community relations at Citizens, said the program has created about that many units already, including about 300 in Bristol, Woonsocket and Providence’s Elmwood neighborhood.
Developers of both rental and owner-occupied properties are eligible for the loans, which have a fixed interest rate of 3 percent for 3 years, with a 25-year amortization.
While the program is closing in on its goals, Cola said, it is still going strong. Citizens has made affordable housing a priority, she added, because it is crucial to creating “healthy families.”
“Healthy families equal healthy communities,” she said, “and when we have healthy communities, businesses thrive.”
Bank of America spokesman Ernesto Anguilla said his institution invested $174 million in affordable housing projects in Rhode Island during 2005.
Over 10 years, the bank has pledged to provide $750 billion in community development, lending and investing, nationwide; the $174 million Anguilla mentioned is a big part of Rhode Island’s share of that investment to date.
Several institutions have also set out to make homeownership more affordable for their own employees. BankRI, for example, offers its employees a $2,500 grant for the purchase of their first home, as well as reduced-rate mortgages. Citizens also offers grants to employees who are buying a home, Cola said.
Peter Walsh, BankRI’s senior vice president of retail lending and director of community relations, said the banks have played a major role in addressing the state’s affordable-housing problems. Walsh, who also co-chairs the R.I. Housing Resources Commission, said that BankRI’s efforts have been good for both the bank and its customers.
“The bank has me dedicate time to affordable housing because the bank recognizes that it’s important,” Walsh said. “When the state wants to grow and the bank wants to grow, it’s important that we have affordable housing.”
But Rhode Island Housing’s Barnett said that, while banks in Rhode Island do put a lot of focus on housing, his agency is always hoping its partners can do more, particularly to create affordable housing.
“We don’t ever want to let people think they can rest on their laurels,” Barnett said. “We always want to encourage our partners to stretch more in our direction.”


Published 11/04/2006
Issue 21-30