NCSHA Washington Report | August 22, 2025

For the second time in five years, efforts by the federal bank regulators, under three different administrations, to modernize the regulations that implement the Community Reinvestment Act have run aground. At this point, it’s probably for the best.

The CRA, enacted in 1977, grades federally insured depository banks on how equitably they are serving low- and moderate-income borrowers in communities where they have branches and ATMs, and generally conditions merger approval on good scores.

The law has resulted in more mortgage, small business, and community development lending in the covered areas, and it drives bank investment in affordable housing through the Low-Income Housing Tax Credit, which is all the more important now in light of the program’s recent expansion.

The CRA has been much less impactful than intended in expanding credit or improving credit scores for borrowers, in part because it doesn’t cover the independent mortgage banks and online-only lenders. Some banks that are covered complain about the cost of compliance and inconsistency in regulators’ evaluation of their performance.

In 2020, during the first Trump Administration, the Office of the Comptroller of the Currency, which oversees the nationally chartered banks that account for most of the activities subject to the CRA, published a comprehensive overhaul of the rules but without the concurrence of the Federal Reserve and Federal Deposit Insurance Corporation, so the rewrite went nowhere.

By 2023, during the Biden Administration, the three agencies had come to agreement on a totally different revamp, but it was blocked after a U.S. district court in Texas sided with several bank trade groups that had sued the agencies to block its implementation. Last year (under Biden), the agencies appealed that ruling, but this spring (under Trump 2.0) they proposed to stay it, pending yet another rulemaking they said would rescind the 2023 version.

Which the three agencies did last month, proposing to replace the 2023 rule with regulations originally adopted in 1995 — which have been in place the whole time since.

The National Community Reinvestment Coalition said the bank agencies’ action “will limit the CRA’s effectiveness and preserve unequal access to wealth-building opportunities as more and more bank activities occur outside the scope of CRA exams.” The American Bankers Association said, “The legacy rule is not perfect, but it is more closely aligned with Congressional intent and is more workable than the 2023 Rule.” Home builders, nonprofit housing providers, and NCSHA for the most part share that view.

We also made the point that the agencies can still make small but constructive improvements within the “reproposed current framework.” The new requirement that the agencies publish an illustrative list of CRA-qualified activities is an example. A logical addition would be similar treatment for mortgage-backed securities containing affordable housing loans and financing for “naturally occurring affordable housing.”

While the bank regulators in an ideal world would have kept broadly supported elements of previous reform efforts in place, in the real world their move back to the future delivers something perhaps more valuable in today’s Washington: some certainty.

Stockton Williams | Executive Director

Washington Report will return September 5.

In This Issue

• NCSHA Urges Regulators to Restore Previous CRA Rules
• NCSHA Applauds FHA for Delving into Buy Now Pay Later Lending
• NCSHA in the News
• Looking Ahead

NCSHA Urges Regulators to Restore Previous CRA Rules
As mentioned above, NCSHA on Monday submitted comments urging federal banking regulators to quickly go forward with the proposed rule to rescind their October 2023 rule revamping their Community Reinvestment Act (CRA) regulations and return to the previous CRA regulatory framework issued in 1995. The 2023 CRA rule, issued jointly by the Federal Reserve, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, has faced legal challenges, and its implementation recently was delayed by a federal court in Texas, creating regulatory and legal uncertainties for banks and other CRA stakeholders. Returning to the 1995 framework, NCSHA argued, will ensure the CRA continues to meet its critical mission of promoting community-based lending. Further, restoring the 1995 framework will reinstate the investment test for large banks, incentivizing banks to invest in Housing Credits and Housing Bonds.

NCSHA Applauds FHA for Delving into Buy Now Pay Later Lending
In our response Thursday to the U.S. Department of Housing and Urban Development’s June 24 Request for Input regarding the use of Buy Now Pay Later (BNPL) unsecured debt, NCSHA commended HUD for looking into this growing but opaque form of consumer debt and highlighted its potential for contributing to mortgage loan denials and delinquencies. NCSHA’s letter recommends HUD work with other federally backed mortgage providers to develop a common approach to underwriting a home buyer’s usage of BNPL loans, promote more effective housing counseling on BNPL lending, and consider adding a delinquency code to enable servicers to report when BNPL lending has contributed to a borrower’s delinquency.

NCSHA in the News
Tax Credit Advisor, 8.18.25, Industry Looks Boldly Toward the Future as Bond Financing Threshold Requirements Are Halved
BisNow, 8.10.25, LIHTC Changes Bring Hope for Affordability Advocates, But HUD Cuts Loom

Looking Ahead

Legislative and Regulatory Activities

• August 25 | Comments Due | HUD Request for Information: Buy Now, Pay Later Lending
• September 19 | Comments Due to NCSHA | FHFA Notice on Repealing the Fair Lending, Fair Housing, and Equitable Housing Finance Plans Regulation
• September 26 | Comments Due | FHFA Notice on Repealing the Fair Lending, Fair Housing, and Equitable Housing Finance Plans Regulation
• October 15 | Comments Due to NCSHA | Federal Banking Regulators’ Request for Comment on Simplifying and Updating Community Reinvestment Act Regulations
• October 23 | Comments Due | Federal Banking Regulators’ Request for Comment on Simplifying and Updating Community Reinvestment Act Regulations

NCSHA, State HFA, and Industry Events

• September 3 – 4 | 2025 HousingIowa Conference | Cedar Rapids, IA
  Jennifer Schwartz will speak at this event.
• September 5 | Early-Bird Registration Ends: NCSHA Annual Conference & Showplace | New Orleans
• September 7 – 9 | PHADA 2025 Legislative Forum | Washington, DC
  Jennifer Schwartz will speak at this event.
• September 9 | 2025 Maine Affordable Housing Conference | Bangor, ME
  Stockton Williams will speak at this event.
• September 17 – 19 | New Mexico Housing Summit | Albuquerque, NM
  Stockton Williams and Jennifer Schwartz will speak at this event.
• September 17 – 19 | 2025 Southeastern States Conference | Richmond, VA
  Garth Rieman will speak at this event.
• September 18 | New York State Association for Affordable Housing’s Upstate New York Affordable Housing Conference | Rochester, NY
  Robert Henson will speak at this event.
• September 25 – 26 | Novogradac 2025 Housing Tax Credit and Bonds Conference | Nashville, TN
  Jennifer Schwartz will speak at this event.
• October 4 – 7 | NCSHA Annual Conference & Showplace | New Orleans