Treasury released a report on April 3 containing a series of recommendations to improve the Community Reinvestment Act (CRA). The CRA was crafted to ensure that banks meet the needs of their local communities with a particular focus on those with low and moderate income. CRA reform is just one of the issues that NMHC/NAA identified in 2017 when the new Administration took office. Changes to CRA could help address the growing need for more housing that Is affordable.
Taking into account how significantly banking has changed since CRA was first enacted, Treasury’s recommendations focused on four main areas:
- Assessment Areas - Update the assessment areas for banks to include not only the physical footprint of its branches, but other areas that are served but have no branch networks.
- Evaluation Clarity and Flexibility - Make changes to CRA eligibility determinations, including: expanding the types of loans, investments, and services eligible for CRA credit; establishing more transparent standards for CRA credit, ensuring better consistency and predictability across the regulators; and simplifying record-keeping.
- Evaluation Process - Standardize CRA examination schedules and improve timing of the release of reports within and between regulators.
- Performance - Incorporate more incentives for banks to meet CRA guidelines.
The report was released ahead of an expected update to CRA guidelines that will be issued by banking regulators sometime this year. It will remain to be seen how much the report influences the banking regulators, but as noted in the report, Treasury calls on the regulators to do a better job in coordinating their evaluation and enforcement activities.
NMHC/NAA will closely monitor the release of the regulators’ updated CRA guidelines and will be submitting comments to ensure that multifamily borrowing and investment activities are fairly represented. NMHC/NAA members may wish to also consider submitting comments to help inform and craft the new CRA regulations.
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