PNC Pledges More Than $900 Million In Community Reinvestment

The Record ( — Wednesday, September 1, 2010

The Record


"There is a lot of hand-holding in the process. We have less of a default rate than we have with conventional mortgages. We want mortgages that are actually performing."

PNC Financial Services Group Inc. has agreed to make more than $900 million in community reinvestments in New Jersey over the next three years, renewing a previous agreement, the company said Tuesday.

The accord negotiated with non-profits New Jersey Citizen Action and the Housing and Community Development Network of New Jersey includes a pledge to make $550 million in business loans in targeted areas, which in northern New Jersey may include low- and moderate-income neighborhoods in cities such as Paterson, Passaic and Hackensack.

The agreement also includes $211 million in discount home-equity and home-improvement loans, $66 million in mortgages at discounted rates and other investments geared to low- and moderate-income individuals and neighborhoods.

"Extending this agreement reflects our historic focus on providing community and economic development opportunities for local communities that deliver sustainable, tangible results," said Linda Bowden, regional president for Pittsburgh-based PNC in northern New Jersey, in a statement.

In the past three years, PNC made more than $1 billion in similar investments in the state, William Best, a senior vice president for PNC, said Tuesday during a luncheon in Newark where the agreement was announced.

Best said that despite the housing-market downturn over the past two years and soaring foreclosures, the loans — which help the bank meet federal community reinvestment requirements — are performing well because borrowers' qualifications are carefully assessed and the buyers receive homeownership and credit counseling through Citizen Action.

"There is a lot of hand-holding in the process," Best said. "We have less of a default rate than we have with conventional mortgages." He declined to provide specific numbers. Best said the bank holds most of the discount-rate home loans on its books instead of selling them on the secondary market for a quick profit.

"We want mortgages that are actually performing," he said. As of June 30, PNC had $838 million in non-performing residential mortgages out of a portfolio of $18.58 billion in residential mortgages, according to documents filed with regulators.

The bank also promises to provide funding to help non-profit developers build affordable housing and community-services facilities, make millions of dollars in investments in low-income housing tax credit projects, and give grants to assist low- and moderate-income home buyers in making down payments. The bank also will make grants and loans available to people with disabilities.

"This agreement came out of a long-term relationship," said Phyllis Salowe-Kaye, executive director of New Jersey Citizen Action. "This is at least the third time we renewed with PNC."

"The best way to kick-start the local economy is to give people the tools they need to live in homes they can afford," said Diane Sterner, executive director of the Housing & Community Development Network of New Jersey.

Borrowers earning up to 80 percent of the median income will get a half-percentage-point discount on mortgage rates, she said. Meanwhile, the two non-profits are negotiating a renewal of a community reinvestment agreement with TD Bank that expires next year. That three-year accord, which TD inherited from its March 2008 acquisition of Commerce Bancorp, was for $700 million.

Sandra Bartlett of Maplewood, a retired Essex County welfare caseworker, said community reinvestment lending worked well for her. She bought a two-family house 16 years ago for $162,000 with a discounted mortgage rate through a homeownership program where Citizen Action partnered with First Union, now Wachovia.

"At that time, people were paying 8, 8.5 percent and I got 5.65," Bartlett said. "I could afford it because the rate was low."

She still lives there, renting out the upstairs apartment to help pay the mortgage. "I love my house," she said. "It's been a wonderful ride."

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