NAAHL Cautions Against Changes to CRA that Would Reduce Affordable Housing and Community Development Outcomes
WASHINGTON, DC – National Association of Affordable Housing Lenders (NAAHL) President and CEO Sarah Brundage released the following statement in response to the proposed updates to the Community Reinvestment Act (CRA) regulations by the Office of the Comptroller of the Currency (OCC) and Federal Deposit Insurance Corporation (FDIC):
“In one year, CRA incentivized more than $430 billion of private capital for affordable housing and community development, homeownership, and small businesses and small farms – nearly six times the annual appropriations for HUD, USDA’s Rural Housing Services, the SBA, and the CDFI Fund combined. CRA is especially critical for investments in the Low-Income Housing Tax Credit (LIHTC) and the New Markets Tax Credit (NMTC). Blunt changes to CRA can have unintended consequences that would hurt communities, including reducing affordable housing supply and preventing or delaying community projects tied to neighborhood affordability and economic growth. Unfortunately, the latest proposed changes to CRA may do just that.
It’s quite simple: fewer banks focused on community development under CRA will mean less lending and investment in communities. Raising the asset threshold of banks defined as “small banks” would reduce the number of banks incentivized to make loans and investments in affordable housing and community development. For instance, if the FDIC and OCC finalize a rule that defines small banks as those with less than $10 billion in assets, more than 1,500 banks, or 36 percent of all banks nationwide, would no longer be incentivized to provide community development loans or investments in the places where they do business. These banks provided nearly $27 billion in community development loans in one year, making up 35 percent of loan volume nationwide. These banks also play an essential role as investors in LIHTC and NMTC – especially in smaller markets and rural communities. Furthermore, proposed changes to expand eligible activities may dilute the actual impact of CRA in solving our nation’s affordable housing crisis.
Given the volume of community development lending and investment currently supported by CRA, even modest reductions in participation could reduce the number of housing and community development projects, hurting banks’ customers, weakening local economies, and disinvesting in the affordability of communities.
The National Association of Affordable Housing Lenders believes in a durable, impactful CRA framework that provides the certainty for banks and their partners to support meaningful lending and investments in communities. We also believe that updates to the CRA regulatory framework should be done on an interagency basis with all three regulators. We look forward to reviewing the proposal in detail and engaging the OCC and the FDIC to ensure that any attempts to update CRA support banks and their partners serving the affordable housing and community development needs of communities nationwide.”
NAAHL has prepared an initial national fact sheet on the potential impact of changes to asset thresholds for banks under CRA on affordable housing and community development.