Integrity. Impact. Independence.

Resolution to support equitable access to homeownership through fair lending and a strong community reinvestment act

Docket 1510

WHEREAS: The Community Reinvestment Act (CRA) was enacted on October 12, 1977 to end the practice of “redlining” by financial institutions where they would draw a red line on a map around neighborhoods they did not want to offer financial services; and

WHEREAS: Before the enactment of the CRA, redlining made it near impossible for low- and moderate-income Americans, racial and ethnic minorities, and their neighborhoods to access credit services, such as mortgages and business loans, regardless of their qualifications or creditworthiness; and

WHEREAS: The CRA establishes a regulatory regime for monitoring the level of ending, investments, and service sin low-and moderate-income neighborhoods traditionally underserved by lending institutions, with the Office of the Comptroller of the Currency reviewing nationally chartered banks and the Federal Deposit Insurance Corporation (FDIC) and the Federal Reserve Board, both of whom examine state-chartered banks; and

WHEREAS: Federal regulators assess and “grade” a lending institution’s activities in low- and moderate-income neighborhoods, and can deny or condition mergers or expansions based on the quality of service in these neighborhoods; and

WHEREAS: A financial institution’s CRA grade can be downgraded if a federal agency uncovers evidence of illegal, abusive or discriminatory lending on their fair lending exams that occur at about the same time as CRA exams; and

WHEREAS: Since 1996, CRA-covered banks issued more than 25 million small business loans in low- and moderate-income tracts, totaling more than $1 trillion, and $980 billion in community development loans that support affordable housing and economic development projects benefiting low- and moderate-income communities; andWHEREAS: The annual dollar amount of community development loans increased 443 percent from $17.7 billion in 1996 to $96 billion in 2016; and

WHEREAS: A 2016 review of the CRA examinations of banks with asset sizes between $313 million and $1.252 billion found that small banks produced over $9.3 billion of community development (CD) loans and grants; and

WHEREAS: Studies have found that home lending is safer when covered by the CRA and neighborhoods benefit from lending from CRA-covered banks through lower delinquency rates; andWHEREAS: The full potential of CRA has not been realized because it has not been updated to take into account changes in the banking industry, and independent mortgage companies and financial technology companies not covered by CRA make up a substantial portion of the lending market; and

WHEREAS: Modernization of the CRA should address these issues while upholding the intended purpose of the law, protecting residents from discrimination based on race, ethnicity, income or the geography in which they live; and

WHEREAS: Boston community organizations, including the Massachusetts Affordable Housing Alliance, Massachusetts Association of Community Development Corporations, and local CDCs have negotiated CRA agreements resulting in billions of dollars of affordable mortgage lending and community development lending in Boston neighborhoods since 1990; and

WHEREAS: CRA is responsible for the longest running and most successful affordable mortgage lending program in the nation, the ONE Mortgage program, which since its establishment by community groups, state and city government and area banks in 1991, has reached 21,000 lower income households since 1991, with over 5,000 in Boston; and

WHEREAS: The ONE Mortgage program is a critical tool for closing the racial homeownership gap in Boston and Massachusetts and the CRA is the reason it exists; and

WHEREAS: Massachusetts is home to the nation’s most comprehensive CRA covering state-chartered credit unions and independent mortgage companies as well as state-chartered banks; and

WHEREAS: Valuable local institutions and programs like the Massachusetts Community and Banking Council, Massachusetts Housing Investment Corporation, Basic Banking for Massachusetts, ONE Mortgage, and countless other bank-community initiatives have resulted from a strong, vital federal CRA; and

WHEREAS: Bank branches in previously redlined communities like Roxbury, Mattapan and Dorchester were opened and have stayed open because of CRA; THEREFORE BE IT


That the Boston City Council urges modernization of the Community Reinvestment Act that expands coverage while protecting the intent and purpose of the original law.

Filed in City Council: October 17, 2018

Docket 1510 PDF

Watch October 17, 2019 BCC Meeting

updated: 1 year ago