A diverse group of civil rights organizations, affordable housing leaders, and housing industry trade groups joined forces to urge that a new bank capital proposal be reconsidered. Twenty-seven organizations signed the letter to banking regulators, including the National Housing Conference, National Urban League, NAACP, UnidosUS, and the Mortgage Bankers Association.
The group said the proposed rule, known as the Basel III Endgame, “will lead to reduced credit availability for all types of real estate buyers and undermine economic growth. Worse, if these standards are adopted, they will have a devastating impact on our efforts to increase homeownership in communities of color and disadvantage all LMI, first-time, and, in particular, first-generation homebuyers of all races who do not have the benefit of multi-generational wealth or higher than average incomes.”
The letter urges the regulators, the Office of the Comptroller of the Currency, the Federal Reserve System, and the Federal Deposit Insurance Corporation (the Agencies), to make major changes to its proposed rule raising capital standards for bank-originated mortgages and other activities that directly impact underserved communities.
The groups also raised concerns about the potential disparate impact on Black and Latino borrowers, particularly with the proposed dramatic increase in capital requirements for low downpayment mortgages, asserting that this move contradicts the Biden Administration’s commitment to fostering more affordable and equitable housing opportunities. “It is unclear why the Agencies would issue this Proposed Rule when these same agencies recently joined guidance encouraging lenders to originate Special Purpose Credit Programs, which were designed to overcome the discriminatory policies that have created wide and persistent homeownership and wealth gaps,” the letter states.
The letter also said that the proposed rule would undercut the Biden Administration’s own policies to expand lending and investment in underserved communities, including the same regulators own recent changes to the Community Reinvestment Act (CRA). The proposed changes “inexplicably tell banks that under CRA, banks are expected to operate in these areas, but simultaneously under Basel the agencies are discouraging any products designed for the very members of those communities,” the letter said.
NHC President and CEO David M. Dworkin said the proposed rule is “unnecessary and unwarranted, and dramatically impacts banks’ lending to low- and moderate-income individuals, particularly in a market where home prices and mortgage rates are at historic highs.”
LIST OF GROUPS WHO SIGNED THE LETTER
National Housing Conference
Bank Policy Institute
Enact Holdings, Inc.
Faith And Community Empowerment (FACE)
Habitat for Humanity International
Homeownership Council of America
Local Initiatives Support Corporation (LISC)
Low Income Investment Fund
Manufactured Housing Institute
Mortgage Bankers Association
National Affordable Housing Management Association
National Association of Home Builders of the United States
National Association of REALTORS®
National Community Stabilization Trust (NCST)
National Multifamily Housing Council
National Council of State Housing Agencies
National Urban League
New American Funding
Pulte Financial Services
U.S. Mortgage Insurers
Western Alliance Bank
Founded in 1931, the National Housing Conference is the oldest and broadest housing coalition in America. NHC is a diverse continuum of affordable housing stakeholders who convene and collaborate through dialogue, advocacy, research, and education, to develop equitable solutions that serve our common interest—an America where everyone is able to live in a quality, affordable home in a thriving community. Politically diverse and nonpartisan, NHC is a 501(c)3 nonprofit organization.