Banking Regulators Propose New CRA Reforms

Yesterday, the Office of the Comptroller of the Currency (OCC), the Federal Deposit and Insurance Corporation (FDIC), and the Federal Reserve released new proposed guidelines for how bank examiners will enforce the Community Reinvestment Act (CRA).  The new guidance amends the agencies’  “Questions and Answers” worksheet, which is intended to provide clarification on how CRA requirements are enforced.  The revisions are part of an ongoing effort the agencies have undertaken to align CRA standards with modern banking practices.

Several elements of the proposed revisions could help to promote activities associated with affordable housing.  First, the proposal would classify affordable mortgage lending activities that use alternative methods of assessing a borrower’s creditworthiness as an example of an “Innovative and Flexible Lending Practice.”  This will allow large financial institutions to get credit for supporting such programs when being examined for CRA compliance as long as the program proves to be effective.

In addition, the proposal would also add additional examples of what types of activities would be considered as supporting “Economic Development” under CRA.  One new example would include funding federal, state, local, or tribal government initiatives that would support affordable housing (or other activities).  The proposal would also allow loans made to “borrowers to finance renewable energy or energy-efficient equipment or projects that support the development, rehabilitation, improvement, or maintenance of affordable housing or community facilities” to be classified as “community development loans.”

Comments on the proposed revisions will be due 60 days after the proposal is published in the Federal Register.  NCSHA is still considering whether to submit comments on behalf of all HFAs.

If you have any thoughts you think NCSHA should consider on this proposal, please contact Greg Zagorski by October 17, 2014.