Earlier today, the Office of the Comptroller of the Currency (OCC) finalized their overhaul of the Community Reinvestment Act (CRA) regulations. Although the Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation (FDIC) released a proposed CRA rule together, the FDIC noted that they are not prepared to finalize a CRA proposal at this time, meaning the FDIC’s final rule may differ from the OCC’s. Moreover, the Federal Reserve, also responsible for governing the CRA, was not involved in the proposed rule.
The CRA is a critical tool that encourages banking and lending institutions to lend necessary funding to affordable housing and community development projects by receiving favorable CRA consideration for community development activities. These activities include investment in Low-Income Housing Tax Credit (LIHTC) projects, New Market Tax Credit (NMTC) projects, and historic rehabilitation tax credit projects. Virtually no affordable rental housing development would occur without LIHTC, and the CRA is critical to ensuring banks remain motivated to invest in LIHTC.
According to the OCC, the final rule made several changes to the proposed rule, including:
- Clarifying the importance of the quantity and quality of activities as well as their value.
- Increasing credit for mortgage origination to promote availability of affordable housing in low- and moderate-income areas.
- Clarifying credit for athletic facilities to ensure they benefit and support low- and moderate-income communities.
- Deferring establishment of thresholds for grading banks’ CRA performance and delineating banks’ deposit-based assessment areas until the OCC assesses improved data required by the final rule.
NAHRO submitted comments on the proposed rule on April 8. NAHRO’s main concerns with the proposed rule predominately focused on potential negative impacts to the LIHTC program and overall investment in affordable housing development.
The OCC’s final rule can be found here.