We are counting on you to lift your voice to push back against potentially harmful changes to the Community Reinvestment Act (CRA). CRA is a landmark civil rights law to end discrimination that was once common in America’s banking and housing markets.
While some strides have been made, the lack of investment in low-income areas and communities of color remains a persistent concern. Even still, regulators have proposed ideas that may substantially weaken the law via an Advanced Notice of Proposed Rulemaking (ANPR). We need you to speak up to ensure CRA is strengthened, not weakened.
We only have until Nov. 19 to comment on these ideas and urge regulators to consider CRA reforms that more effectively hold banks accountable for equitable investments and help them more flexibly respond to community needs.
In order to simplify the process, we have drafted a letter at the end of this email for our members to use that outlines our concerns and suggestions.
Thank you for your advocacy. There is power in community voices coming together to protect critical resources and push for urgently needed reforms. For more background on CRA basics, the proposed changes and our concerns related to ANPR, click here to find the PowerPoint presentation from our joint NCRC-Prosperity Indiana webinar.
For questions, contact Kathleen Lara at email@example.com.
20% Loss of LMI Mortgage and Small Business Lending
Comment regarding “Reforming the Community Reinvestment Act Regulatory Framework”
RE: Docket ID OCC-2018-0008
(Name of Your Organization) appreciates the opportunity to comment regarding the Office of the Comptroller of the Currency’s (OCC) Advance Notice of Proposed Rulemaking (ANPR) regarding the Community Reinvestment Act (CRA). Since 1996, banks have issued almost $2 trillion in loans and investments in low- and moderate-income communities, ensuring more individuals have the opportunity prosper and become homeowners, more businesses receive loans to grow and thrive, and more community development organizations can expand their work to revitalize neighborhoods. CRA is a critical tool to address equity in lending, access to credit, and investments in underserved communities.
(Your organization’s name) is based in (city or neighborhood), and (describe services and mission). In carrying out this work, it is clear how CRA has motivated banks to provide loans and investments for affordable housing and economic development in areas and/or for projects that would otherwise not receive this critical capital. (Describe here in a few sentences an example of CRA financing that has addressed a critical need and/or is innovative.)
With that in mind, (Name of Your Organization), has strong concerns about how the proposed changes weaken regulators’ and communities’ ability to ensure CRA-related investments are indeed responsive to community needs. The OCC’s proposal significantly diminishes the importance of assessment areas on CRA exams, which are essential in combating lending inequities. Using data collected from the CRA and the Home Mortgage Disclosure Act (HMDA) from 2012 through 2016 to examine loan volumes, the National Community Reinvestment Coalition (NCRC) estimates that if these proposed changes were to be implemented, the losses in mortgage and small business loans in low- and moderate-income (LMI) census tracts would be between 10 and 20 percent. In Indiana, that would mean LMI neighborhoods could lose up to $1.28 billion in home and small business lending over a five-year time period. In the Congressional district in which we operate, the loss would be (insert the appropriate data from the table above).
Specifically, we are concerned that an OCC idea, commonly called the one ratio, would make CRA exams considerably less effective in evaluating how banks are meeting local needs, particularly in hard-to-serve areas that are economically divested in very rural or urban areas. The one ratio would consist of the dollar amount of a bank’s CRA activities (loans, investments, and services to low- and moderate-income borrowers and communities) divided by the bank’s assets. The ratio is supposed to reflect CRA effort compared to a bank’s capacity.
This approach cannot tell an examiner, a bank, or a member of the public how responsive a bank is to its various service areas. Currently, CRA exams evaluate and rate bank performance in assessment areas where banks have branches, and examiners are required to solicit and consider comments from community members about performance in assessment areas. This is central to the intent of CRA because these public comments offer insight on the practical impacts of CRA investments or areas for improvement. The one ratio replaces assessment areas or significantly diminishes the importance of assessment areas and public input on CRA ratings. Regulators must not devalue the public input process or weaken standards; rather, they should increase communication between all stakeholders about ways to more effectively meet community needs.
(Add any details about how your organization has engaged banks and/or CRA examiners in discussions about local needs and proposed financing and/or bank lending. Describe how these discussions may be diminished if assessment areas become less important on CRA exams.)
Additionally, we agree that changes in banking and technology require innovation to increase services to communities in need, but research has shown that low- and moderate-income consumers rely on branches for access to loans and banking services. This is a critical tool to combat reliance on predatory lending operations that are often pervasive in divested communities and disproportionately impact communities of color. If CRA exams dropped branches from consideration, the amount of lending and bank services in low- and moderate-income neighborhoods would decrease significantly. (Add your experience about bank branches in lower income neighborhoods or helping your modest income clients who are unfamiliar with banks get loans via bank branches).
Accordingly, the proposal’s discussion of the need to expand CRA exams to assess bank lending in areas beyond bank branches does so in support of the one ratio concept. Instead, the OCC should establish assessment areas for geographies where banks do not have branches but engage in a significant amount of business to gain a better understanding of service needs and opportunities in those areas.
Regarding the question within the ANPR about whether CRA consideration should be broadened for additional activities and populations, consumer and community development advocates like (Your Organization Name) have significant concerns that this would allow financing of CRA-eligible projects that do not directly serve low- and moderate-income neighborhoods and populations. By awarding points for financing or activities that do not address lack of access to banking or community development needs in lower income neighborhoods, the CRA’s mission of addressing inequality and redlining will be diluted.
In terms of expanding populations served by CRA, CRA exams must evaluate lending and services to people and communities of color. Since racial disparities in lending persist, it is essential that CRA must include lending, investing, and service to people and communities of color in its evaluations. The Joint Center for Housing Studies of Harvard University’s 2018 State of the Nation’s Housing report noted that the homeownership rate between black and white Americans is widening nationally. “Between 1994 and 2016, black homeownership rates increased just 0.3 percent while white rates rose 2.2 percent, widening the black-white gap to 29.2 percent,” according to the report.
(Add your thoughts and experiences related to serving communities of color and addressing racial disparities in lending).
One important way to more effectively address lending disparities would be for regulators to consider whether mortgage servicing companies, credit unions and insurance companies should also be subject to CRA-style exams. We suggest requesting public comment on this approach, which has long been a discussion among community development advocates who recognize we need to broaden CRA applicability to more ably address lending inequality.
To summarize, (Your Organization) agrees that CRA modernization is essential, but only in ways that boost lending and access to banking for underserved communities. We agree that CRA ratings must be reformed, but in ways that foster more inclusive investments, not contract current obligations. We also urge regulators to examine assessment areas that include geographies outside of bank branch networks in which banks make high volumes of loans. In order to continue working towards greater equity in lending, we urge regulators to examine lending and services to people and communities of color. Lastly, (Your Organization) believes the one ratio approach will diminish the importance of branches, assessment areas, and public input and result in a decrease of lending and access to banking in the communities that need it the most.
Investments through CRA are catalytic to divested markets and neighborhoods. These investments and capital infusions are often the first-in dollars, meaning it drives rehabilitations, loans, and developments that then spur broader market interest, resulting in larger scale revitalization and quality of life improvements. We urge the OCC to work with national, state and local consumer and community advocates to enact the kinds of reforms needed to ensure more individuals, businesses and communities can access credit, capital and opportunity.
Thank you for your thoughtful consideration of these comments.
Despite budget negotiators working right up to the Sept. 30 fiscal year deadline to pass Fiscal Year (FY) 2019 Transportation-Housing and Urban Development (THUD) and U.S. Department of Agriculture budgets, there was no final agreement on the spending package. Instead, Congress passed a continuing resolution, or short-term spending bill, to continue current FY18 funding levels until Dec. 7. Budget negotiators will now work to finalize FY19 funding levels for those departments in the lame duck session of Congress ahead of the December deadline. We will continue to urge the Indiana delegation in Congress to support the higher levels of funding, primarily contained within the Senate proposals, for housing programs and opposed any harmful policy proposals, known as “riders,” from being attached to that spending package. For more information, visit our previous budget coverage here: https://www.prosperityindiana.org/Policy-News/6676998 and here: https://www.prosperityindiana.org/Policy-News/6574990
On October 1, researchers from Harvard and Brown University released the Opportunity Atlas, a mapping tool the aims to address the basic question how much location influences outcomes. The mapping tool is comprised of U.S. Census tract-level datasets from the 2000 and 2010 decennial Censuses as well as data from Internal Revenue Service federal income tax returns and the 2005-2015 Census American Community Surveys (ACS) to evaluate income, parental characteristics, children's neighborhoods, and other variables.
Those data sets were used to evaluate children’s outcomes in adulthood, such as earnings distributions and incarceration rates by parental income, race, and gender. Based on that information, the tool aims to trace poverty and incarceration rates, for instance, to neighborhoods in which children grew up.
"You see that for kids turning 30 today, who were born in the mid-1980s, only 50 percent of them go on to earn more than their parents did," said Harvard University economist Raj Chetty, one of the researchers who built the tool. He added that the information can help pinpoint the places where lots of kids are climbing the income ladder and "the places where the outcomes don't look as good," he says.
These data points add further weight to conversations around equity and how much one’s zip code can determine his/her future, to a significant extent. In an interview on the tool, Chetty shared that the Atlas demonstrates how if a person moves out of a neighborhood with worse prospects into to a neighborhood with better outlooks, that move increases lifetime earnings for low-income children by an average $200,000.
In some cases, the mapping tool shows that those differences can be just miles apart. Unfortunately, the tool also shows significant work that needs to be done to address racial inequities as research showed that earnings and incarceration rates can vary dramatically for white, black, and Hispanic men even when they are raised in the same neighborhoods and hite men experience better upward income mobility than black men virtually everywhere in the country
Moving forward, Prosperity Indiana plans to use this robust tool to help members utilize this data to influence community development plans and initiatives. The conversations must focus on removing barriers to affordability and opportunity in identified low-performing areas so that prosperity is not out of reach for any Hoosier.
This month, the National Low Income Housing Coalition published Getting Started: First Homes Being Built with 2016 National Housing Trust Fund Awards, profiling how 42 states have awarded their inaugural 2016 national Housing Trust Fund (HTF) allocations. Prosperity Indiana pushed for the National HTF program’s creation and funding, so it is encouraging to see these funds deployed to increase the supply of housing for severely cost-burdened households.
The HTF, a block grant to states, is the first federal resource since 1974 for building, rehabilitating, or preserving homes targeted to extremely low income (ELI) households, those with income at or less than 30% of the area median income or less than the federal poverty line. The HTF is funded through a dedicated source, a small assessment on the volume of new business for Fannie Mae and Freddie Mac.
Nationwide, states are using most of their HTF resource for projects that will serve people experiencing homelessness, people with disabilities, elderly people, and other special needs populations. At the time of publication, 129 projects have been awarded 2016 HTF money, with about 1,500 HTF-assisted units anticipated to be constructed or rehabilitated.
In Indiana, four projects have been awarded with a total of 53 HTF-assisted units. Indiana was one of only seven states with more than 50 units.
The first allocation to states in 2016 was $174 million in HTF funding was allocated to states. It was followed by more than $219 million allocated for 2017 and nearly $267 million for 2018.
For information about the HTF program in Indiana, click here.
The full report is at: http://nlihc.org/issues/nhtf
On Sept. 17, the Senate voted 93-7 to pass a massive $854 billion spending bill (HR 6157), which includes FY19 budget bills for the departments of Defense, Health and Human Services (HHS), Labor and Education, but new funding bills for agencies like the Department of Housing and Urban Development and the Department of Agriculture may very well be stuck at current levels through Dec. 7 via a stopgap funding measure.
House and Senate appropriators are still working through last-minute negotiations towards a spending package that would authorize an FY19 budget for four appropriations bills, including Transportation, Housing and Urban Development (THUD) and Agriculture bills. Unfortunately, that effort appears mired in controversial proposed policy riders the cast doubt on whether or not there can be agreement ahead of the Sept. 30 deadline. If they cannot arrive at an agreement before this deadline, legislators would have to pass a stopgap funding measure and continue working towards approval of FY19 budgets before Dec. 7.
In the meantime, Prosperity Indiana continues to push for the highest possible allocation for the housing titles of these budget bills as well as the inclusion of the Housing Choice Voucher Mobility Demonstration program.
House and Senate FY19 HUD bills included increased compared to FY18 which is promising news as FY18 represented a nearly 10 percent increase compared to FY17 following nearly a decade of deep cuts in the aftermath of the recession and Budget Control Act. For more detailed coverage on those bills, please visit our earlier blog and links here: https://www.prosperityindiana.org/Policy-News/6574990
In Congress, two new legislative initiatives have been introduced that aim to alleviate cost burdens for low-income renters. These bills come on the heels of new data showing that In only 22 counties out of more than 3,000 nationwide can a full-time minimum wage worker afford a one-bedroom rental home at fair market rent. These 22 counties are all located in states with hourly minimum wages higher than $7.25. Further, since 1960, median earnings increased 5% while rents rose 61% and despite increasing need, only one out of every four very low-income renter households, those at or below 50% AMI, receives housing assistance.
In Indiana, a minimum wage worker must have 2.1 full-time jobs or work 86 hours per week to afford a two-bedroom apartment. According to calculations based on census data, there is a deficit of 134,998 units affordable and available for extremely low-income Hoosiers earning 30 percent of area median income or below. With that in mind, we take great interest in new initiatives to help address this housing crisis.
On July 19, Senator Kamala Harris (D-CA) introduced the Rent Relief Act, to provide relief to cost-burdened renters by proposing a refundable tax credit to individuals who pay more than 30 percent of their gross income toward rent and utilities. Taxpayers earning less than $100,000 annually, or $125,000 in high-rent areas, would receive a credit that would cover the difference in rental payments between 30 percent of the taxpayer’s income and rent, capped at 150 percent of fair-market rent. Renters in subsidized housing would be able to claim one month’s rent as a refundable credit.
Soon after, on August 1, Senator Booker (D-NJ) introduced the Housing, Opportunity, Mobility, and Equity Act (HOME) Act that would also provide a refundable tax credit to households who spend more than 30% of their income on rent. The credit would apply to renters earning 80 percent of area median income and would be capped at 100 percent of fair market rent. The HOME Act would also allow renters to defer 20 percent of their tax credit to a rainy day savings program to help cover emergency expenses. Importantly, Sen. Booker’s bill also address the need for the expansion of affordable housing units by requires states and local communities to develop new inclusive zoning policies, programs, or regulatory initiatives to create more affordable housing supply.
Critical Funding Update:On August 2, the Senate approved its Transportation-HUD Appropriations bill. As outlined below, the bill includes $12 billion above the Administration’s request and $1 billion above the House version. This post details funding levels below, but here is a summary of the amendments added during debate.
On Thursday, June 7, the Senate Appropriations Committee voted to advance its FY19 THUD bill. The bill is stronger for housing programs than the House bill, providing $1.8 billion in additional funding – that works out to $12 billion above the president’s FY19 request and more than $1 billion above the House proposal.
The Senate bill:
Programs that would maintain the Omnibus funding levels:
Programs receiving increases include:
The only significant cut is to the Choice Neighborhoods program, which was cut b $50 million.
On Thursday, July 19, the Senate Banking Committee held a hearing confirmation hearing for President Trump’s nominee to become the new director of Consumer Financial Protection Bureau (CPFB), Kathy Kraninger. The CFPB is responsible for overseeing consumer protections in the financial sector and has jurisdiction includes banks, credit unions, mortgage servicers, foreclosure relief companies, and debt collectors operating in the U.S. If confirmed by the Senate, Kraninger would hold significant sway over the way those companies manage mortgages, credit cards, payday loans and other financial products they offer to customers. Click here to read our coverage of the hearing.
At issue in this hearing is the fundamental disagreement the Administration has with the agency’s underlying constitutionality. The current acting director, Mick Mulvaney, has decried what he considers to be a lack of accountability in the structure of the agency. Kraninger, hand-picked by Mulvaney to take over largely shares his views and promised in the confirmation hearing to continue the more pro-business shift at the agency that started under Mulvaney’s time as Acting Director.
If confirmed, Kraninger would serve a five-year term. In laying out her priorities, Kraninger stated she would use cost-benefit analysis to measure the price tag of regulations to industries and continue to go after bad industry behavior.
When pressed on the agency’s payday loan rule and her thoughts on whether or not the agency should repeal it, Kraninger only stated, “While I will not prejudge and cannot predict every decision that will come before me as director, if confirmed, I can assure you that I will focus solely on serving the American people.”
Senate Republicans who have expressed similar concerns to Mick Mulvaney about the agency and expressed support the nominee during the hearing proceedings. Questions from the panel’s Republican members largely focused on increasing transparency and accountability within the CFPB.
Senate Democrats who back the consumer protection actions taken under the previous director, Richard Cordray, took issue with Kraninger’s lack of experience with the agency, consumer protection issues or the financial services sector. Previously, she served at the White House Office of Management and Budget and helped craft President Trump’s 2019 budget plan, which called for cutting the CFPB’s budget and restricting its enforcement oversight.
Senator Donnelly (D-Ind.) sits on the panel and questioned Kraninger about student loan debt and the agency's recent decision to eliminate student loan office focused on loan abuses, which has returned $750 million in relief since its inception, and refocusing those responsibilities on "financial education." Donnelly stated that Hoosier students graduate with an average of $29,000 in debt and underlined the importance of that office. When asked her position on this action, Kraninger pointed to the fact the that CFPB still had an ombudsman for private student loans and she would be talking to that staff on student loan issues.
Donnelly also asked if she agreed with Mick Mulvaney's previous comments in referring to the CFPB as a "joke" and she said she would not have used those words and would support Bureau's mission, "as passed by Congress."
The full Senate is expected to vote soon on this nomination and Kraninger is expected to be confirmed as Republicans hold the majority of seats.
These programs help ensure Hoosiers have access to safe, affordable housing and spur community development investments. While it passed the House on June 6, by a close vote of 210 - 206, the Senate voted down the measure by a vote of 48-50 on Wednesday. Senator Young (R-IN) voted to approve the measure and Senator Donnelly (D-IN) opposed it. To see how your Representative voted, click here.
Below is our action alert text addressing the impact this bill would have had on Prosperity Indiana' members and the Hoosiers served by them:
As a Prosperity Indiana member dedicated to expanding affordable housing access and strengthening our communities, I urge you to oppose harmful rescissions contained in H.R. 3, the Spending Cuts to Expired and Unnecessary Programs Act. Contrary to the bill's title, the legislation would rescind significant resources needed to improve living conditions for low-income Hoosiers and increase investment in distressed communities.
Specifically, H.R. 3 would rescind $39 million from the U.S. Department of Housing and Urban Development's (HUD) Public Housing Capital Fund Program, $40 million from U.S. Department of Agriculture's (USDA) Rental Assistance Program, as well as $164 million from the U.S. Department of Treasury's Community Development Financial Institution Fund (CDFI) programs.
The Public Housing Capital Fund enables Public Housing Authorities (PHAs) to maintain safe, sanitary living conditions for residents. These resources are used for roof repairs, maintaining heating and air conditioning systems, and removing hazards such as lead paint. Unfortunately, appropriations have not kept pace with the urgent need. A 2010 HUD study estimated the backlog on deferred maintenance on public housing was $26 billion, and was expected to grow by $3.4 billion per year. That would put the current backlog at more than $50 billion. Unobligated resources in this fund do not reflect a surplus. To the contrary, these funds are unobligated because PHAs often do not receive enough in one year's allocation to make larger repairs and have to save their annual funding for several years before signing contracts which lengthens the process. Cutting these resources only serves to further jeopardize the health and safety of public housing residents across our state.
USDA's Rental Assistance Program is critical to community stability, providing funding to help low-income households in rural areas access housing stability through public-private partnerships with landlords. Without these funds, many families would be homeless. Short-term funding via continuing resolutions made it difficult to renew contracts and the funds targeted in this bill were intended to ensure there are no shortfalls in fulfilling those existing obligations that would be harmful to housing providers and low-income Hoosiers alike.
Proposed rescissions also include $151 million from the Capital Magnet Fund, resources that were only made available on May 1 of this year, and $22 million from the Bank Enterprise Award Program. These programs attract private capital to support organizations that increase the availability and affordability of housing and improve access to financial services in divested communities.
When you consider that thirty-one percent of households in Indiana are renters and nearly half are cost-burdened already, it is clear we simply cannot afford to cut programs that provide critical housing assistance and incentivize investments in low-income communities. I urge you to oppose this measure.