Campaign to Modernize the CRA (Woodstock Institute)

The Community Reinvestment Act (CRA) is one of the most important laws for building wealth and revitalizing neighborhoods. CRA has leveraged trillions of dollars for low- and moderate income communities since its enactment in 1977, and has had a broader impact on the overall economy by creating jobs, expanding affordable housing opportunities, and promoting small business development. However, as the recent foreclosure crisis has shown, the Act is not perfect. An expansion is needed for the Act to continue to be an effective force for neighborhood revitalization.

An expansion of the act should:

- require that the lending activities of all holding company affiliates be included on CRA examinations and expand the CRA to cover all institutions making mortgages. A substantial share of higher-cost loans was originated by largely unregulated independent mortgage companies and bank affiliates. This higher-cost lending not covered by the CRA has harmed borrowers, destabilized low- and moderate-income communities and communities of color, and was a major force in fueling the subprime lending crisis.

- Expand the CRA to cover borrowers and communities of color. African American and Latino borrowers and communities have long been subject to disproportionately high shares of subprime lending when compared to white borrowers and communities. Extending CRA coverage to consider borrower and community race and ethnicity will be a significant step in reducing these disparities.

- Increase transparency by expanding data collection to give communities the tools to better understand the lending occurring in their neighborhoods. Improving data disclosure to include risky loan features such as adjustable rates, negative amortization, interest-only payments, prepayment penalties, yield spread premiums, and no income documentation will improve the quality of lending in low-wealth communities and communities of color.

Many of these recommendations are included in the CRA Modernization Act of 2009. Send a message to your representative telling them you support CRA modernization.
 
Read more about the CRA and the CRA Modernization Act of 2009:
Campaign to Modernize CRA
Numbers Don't Support Claims of CRA Critics