A number of communities across the nation have been overwhelmed by the number of homes under foreclosure and have appealed to the federal government for relief. One method of assistance under consideration is making changes to the Community Reinvestment Act which was originally designed to help lower income families buy homes in struggling communities.
Will bank regulators come to the aid of struggling towns?
Congress passed the Community Reinvestment Act in 1977 in a bid to reduce discriminatory practices in poor neighborhoods, by making loans available for people unable to find traditional financing elsewhere.
While the CRA has helped bolster low- and middle-income communities, towns with more expensive housing along with a high number of foreclosures have been ravaged.
Relief may be on the way if changes proposed by federal banking regulators are adopted. Under consideration is a proposal that would encourage banks to provide financing for nonprofits to buy up foreclosed properties and rehabilitate them.
Tweaking the CRA has been practiced by bank regulators before in a bid to zero in on bank lending to embattled communities. After the September 11, 2001 terrorist attacks, regulators designated lower Manhattan as CRA-eligible. Gulf Coast communities received similar help following Hurricane Katrina.
News of the proposed changes to the CRA was made through a joint press release issued by the Board of Governors of the Federal Reserve System, Federal Deposit Insurance Corporation, Office of the Comptroller of the Currency and the Office of Thrift Supervision.
According to the release, the four agencies are encouraging the public to provide oral or written testimony on potential changes to the CRA regulations at four hearings to be held around the country. The planned hearing dates and cities are as follows: July 19, 2010, Arlington, Virginia; August 6, 2010, Atlanta, Georgia; August 12, 2010, Chicago, Illinois; and August 17, 2010, Los Angeles, California.
Anyone wishing to submit testimony or attend the hearings must register five business days in advance on the website of the Federal Financial Institutions Examination Council (FFIEC) at http://www.ffiec.gov/cra/hearings.htm. The agencies are encouraging any individual to provide written comments on the CRA regulations to any of the agencies through August 31, 2010.
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