“The new proposal to modernize the Community Reinvestment Act (CRA) is a significant improvement while being open to additional feedback on key issues,” said David M. Dworkin, president and CEO of the National Housing Conference. “This proposed rule moves CRA into the 21st century with a durable approach that will withstand the scrutiny of future swings in political leadership for at least a decade,” Dworkin said.
The National Housing Conference has insisted on four key principles of successful CRA modernization since this process began in 2018. Any meaningful improvement in CRA must:
- Increase investment in communities that are currently underserved;
- Benefit more low- and moderate-income (LMI) people, particularly people of color, who live in those communities;
- Ensure that CRA lending and investment does not lead to displacement of the very people it is meant to help; and
- Make both bank performance and government enforcement more transparent and predictable.
“This proposed regulation succeeds in improving the clarity and consistency of CRA enforcement for both banks and community advocates, without crossing the line into government credit allocation. It improves the way CRA serves both low- and moderate-income communities and the people who live in them. And it ensures that modernization does not lead to the displacement of the very people it is meant to help,” Dworkin said.
“The proposed regulation also recommends strategies for CRA to directly address race for the first time in its 45-year history. By requiring new reporting on lending by race, we will get a much clearer picture of which banks are leading efforts to improve racial equity and how these efforts are doing in individual communities. The proposal achieves this without adding to the regulatory burden under which banks currently report these characteristics under the Home Mortgage Disclosure Act. It also adds incentives to invest in Special Purpose Credit Programs (SPCPs) and alternative underwriting models. SPCPs are an important tool to address racial equity within the limits of the Fair Housing Act and the Equal Credit Opportunity Act. While there is some disappointment that the regulation won’t go further, the fact remains that having a bolder approach reversed by the courts would be a major step backward. This approach is a demonstrable step forward,” Dworkin said.
NHC has formed a CRA Working Group to revied the 679 page proposal and provide detailed feedback by the August 5 deadline for comments.