The 2004-2005 Amendments to the Community Reinvestment Act Regulations: For Communities One Step Forward and Three Steps Back

In 2001, the four federal banking agencies that enforce the Community Reinvestment Act (CRA) began a review of CRA regulations they adopted in 1995. The review lasted until they issued amendments in 2004 and 2005. The review process was controversial, tortuous, and divisive. By the time it was over, residents of the communities the CRA was intended to benefit, including low- and moderate-income and predominantly minority neighborhoods, gained a victory in their efforts to promote community reinvestment and economic development, but also lost significant ground. The victory was strengthened regulation of subprime and predatory lending. The losses included a reduction in the number of banks and savings associations subject to more rigorous CRA standards, a loss in the amount of publicly available data about small business and small farm lending, and the elimination of community development lending and investment and retail banking service requirements for large savings associations. As a result of the amendments to the CRA regulations, underserved communities face a reduction in loans, investments, and services. This article describes the CRA and the 1995 CRA regulations, identifies some of the key issues in the CRA amendment process, describes the amendments to the regulations, evaluates the amendments\u27 likely effect on underserved communities, and offers suggestions to advocates about how they can use the amended CRA regulations to help underserved communities and how to prevent further cutbacks in CRA protections

The Higher Cost of Being African-American or Latino: Subprime Home Mortgage Lending in New York City, 2004-2005

The recent turmoil in the financial markets caused by rising default rates on subprime residential home mortgages should not obscure that several studies have shown that African-Americans, Latinos, and residents of predominantly minority neighborhoods receive a disproportionately high percentage of subprime loans. The subprime lending crisis should also not obscure the fact that they have also received a disproportionately low percentage of all home mortgage loans. This report uses data made public pursuant to the Home Mortgage Disclosure Act (HMDA) to examine home mortgage lending in New York City in 2004 and 2005 to determine whether African-Americans, Latinos, and residents of predominantly minority neighborhoods received their share of home mortgage loans and whether they paid more for the loans they got. The report reaches several conclusions. The most important conclusion is that in New York City in 2005, African-Americans, Latinos, and residents of predominantly minority neighborhoods received significantly higher percentages of subprime HMDA and home purchase loans than whites and residents of predominantly white neighborhoods. Although the HMDA data that this report uses do not contain enough information about the creditworthiness of individual borrowers to determine whether these disparities are the result of illegal discrimination, the disparities in some cases are so stark that they beg for government enforcement agencies who have access to information about borrower creditworthiness to investigate individual lenders further and they invite private parties to commence litigation against lenders through which they can gain access to this information