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Kim Harman spends much of her days among poverty, dilapidated and boarded-up buildings, gated windows, vacant, debris-strewn lots, and run-down blocks. But she's hoping a one-year-old partnership between her organization and M&T Bank Corp. will change that.

In the past year, the executive director of neighborhood group Eastside Pride has been working with the Buffalo-based bank to bring more needed financial services into poverty-stricken parts of the city's East Side. The goal is to stabilize that part of the city by increasing homeownership and strengthening the small business community.

The bank's commitment stemmed from months of public pressure from the grassroots activist group, but is now based more on cooperation, both sides say. Already, the coordination has led to greater marketing of bank services through flyers, advertising and home buyer seminars.

The bank introduced nontraditional products for borrowers with poor credit and has even assigned a new mortgage specialist to focus on the neighborhood. The effort has generated a sharp increase in mortgage lending in the struggling area by M&T, a lender known for conservative underwriting.

Out of 12 applications in 2003, M&T closed five home purchase and three refinance mortgages, with interest rates averaging just over 5 percent. Three more loans had been approved by the end of March 2004.

In contrast, the bank approved just three purchase and refinance loans in all of 2001.

"As our first year in partnership begins to draw to a close, it looks like we will have a lot to celebrate," Harman wrote in an April 1 letter to Brad Dossinger, M&T's regional Community Reinvestment Act officer, and Richard Jachimiak, vice president of risk management for M&T Mortgage Corp.

Harman said she may take the same techniques to other Western New York lenders to spur action on their part. "People were pleasantly surprised that they didn't just follow the letter of the agreement, but did some really positive things," she said.

For their part, bank officials say they're just doing what they're supposed to do and trying to be a responsible lender. They say the effort is good for them as well since it helps their bottom line and their reputation.

"We've found some good common ground trying to link people up with available services," Dossinger said. "We really try to leave no stone unturned."

That's helped local residents like 36-year-old Lenora Foote. The single mother of two boys bought a $60,000, three-bedroom home on Howard Street, just east of downtown, paying for all but $2,000 of it with an M&T mortgage. She also qualified for $3,500 from the bank to assist her with the downpayment and closing costs. And she took an eight-hour training program for first-time home buyers through Hispanics United.

Foote, who had not owned a home before, benefited from the bank's new outreach. The assistant corporation counsel for the city of Buffalo had spent most of the last four years as the city's prosecutor for housing court, and was familiar with Eastside Pride's efforts to clean up the neighborhood.

However, she was not familiar with the group's partnership with M&T, and only decided to try the bank after a seminar the bank participated in at First Shiloh Baptist Church as a result of Eastside Pride's work.

"It's good that the bigger banks show that they are willing to help to do what they can to bring money into the areas that really need it," she said.

Across the country, community activists have long criticized banks for allegedly inadequate lending to low-income and minority borrowers, and challenged them to do better. But despite large numbers of high-cost loans in Buffalo and complaints of discrimination here, such activism was unusual in Buffalo until recently.

That's when a new group of grassroots leaders came to town to spearhead community redevelopment. They include Harman, who was sent to Buffalo three years ago by Chicago-based National People's Action to lead Eastside Pride.

Groups like the NPA or the Association of Community Organizations for Reform Now -- which recently opened a chapter in Buffalo -- are known for their aggressive tactics nationally, including demonstrating outside corporate offices or at the homes of executives.

Here, however, organizations like ACORN have taken a collaborative approach with banks. ACORN even worked with HSBC Bank USA to keep a branch open. "They've generally been good guys," said ACORN coordinator, Lauren Groh-Wargo. "It's never been antagonistic with us and HSBC."

Not so initially with Eastside Pride and M&T. Eastside Pride confronted the bank in 2002 and early 2003 about a lack of lending in the East Side, and called on it to do better in the 180-block area. The bank balked at the group's demands and initially refused to sign a lending agreement, Harman said. So Eastside Pride demonstrated at the bank's executive offices, and protested to regulators when the bank sought to buy Allfirst Financial of Baltimore.

That got M&T's attention. Harman said the bank pledged to beef up its lending efforts and agreed to quarterly monitoring of its progress. It introduced new low-rate products, held seminars, showed up at local events, and gave its lenders incentives for making loans on the East Side, she said.

Harman said Eastside Pride recognizes that M&T is still having a hard time getting enough customers to apply for its products. So the group is working with the bank to develop a new advertising campaign targeting the local community.

M&T officials stress that they are happy to work with any community group, and do so already. But they admit that their relationship with Eastside Pride took an unusual degree of effort to get past initial strain.

"You're not always going to agree with everything on someone's wish list and you're not going to be able to be all things to all people," Dossinger said. But "it presented a unique set of challenges that I hadn't experienced previously."


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