The federal bank and thrift regulatory agencies announced a proposed change to the Community Reinvestment Act (“CRA”) regulations to support stabilization of communities affected by high foreclosure levels. The proposed change would encourage depository institutions to support the Neighborhood Stabilization Program administered by the U.S. Department of Housing and Urban Development (“HUD”), under which HUD has provided funds to state and local governments and nonprofit organizations for the purchase and redevelopment of abandoned and foreclosed properties. The proposal would encourage depository institutions to make loans and investments and provide services to support NSP activities in areas with HUD-approved plans. For NSP areas identified in HUD-approved plans, the agencies would provide CRA consideration for activities that benefit individuals with incomes of up to 120 percent of the area median and geographies with median incomes of up to 120 percent of the area median. Comments on the proposed rule must be submitted no later than 30 days from the date of its publication in the Federal Register, which is expected shortly.
The agencies also conducted a series of public hearings on modernizing the regulations that implement the CRA, and interested parties were invited to provide testimony and written comments. The agencies considered ways to update the regulations to reflect changes in the financial services industry, changes in how banking services are delivered to consumers, and housing and community development needs, and wanted to ensure that the CRA remains effective for encouraging institutions to meet the credit needs of communities.