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PRESS STATEMENT
April 23, 2009 Contact: Alexis Iwanisziw, NEDAP - 212-680-5100
Barb van Kerkhove, Empire Justice Ctr. - 585-295-5815
NEW MULTI-STATE REPORT SHOWS POSITIVE EFFECT OF FAIR LENDING REGULATION ON MORTGAGE PRICING
Lenders not subject to Community Reinvestment Act far likelier to make high-cost loans
A report released today underscores the critical role that the Community Reinvestment Act (CRA)
plays in promoting affordable mortgage lending to lower-income borrowers and communities.
The report, Paying More for the American Dream III, is the third in a series produced annually by
a multi-state collaboration, and examines pricing disparities in mortgage lending in seven
metropolitan areas in the U.S.: Chicago; New York City; Los Angeles; Rochester; Boston;
Charlotte; and Cleveland.
The report, which includes a series of detailed lending maps for each of the seven metropolitan
areas, finds that banks subject to the CRA made a far smaller share of high-cost loans than lenders
not covered by the law. The CRA, passed by Congress in 1977, requires banks to make credit
equitably available to all communities they serve, consistent with safe and sound banking
practices. The CRA has come under attack by those who blame the regulation for causing the
subprime lending crisis, on the grounds that the CRA pushed banks to make bad loans to
unqualified borrowers.
“The CRA is clearly not responsible for the financial crisis. Banks with CRA obligations were far
less likely to make risky, higher-cost loans than lenders not subject to the CRA,” said Alexis
Iwanisziw, Program Associate with NEDAP. “That said, in New York City, for example, banks
with CRA obligations overwhelmingly concentrated their high-cost mortgage lending in
neighborhoods of color.”
Report findings suggest that in all seven cities studied, lenders subject to CRA made a higher
percentage of high-cost loans outside their assessment areas, where they are not examined for
their CRA performance, than within their assessment areas. “This report shows that the CRA has
a positive effect on banks’ lending,” stated Jim Campen of the Massachusetts Affordable Housing
Alliance in Boston.
The report includes the following recommendations:
- Expand the CRA explicitly to cover borrowers and communities of color. Black and Latino
borrowers and communities have long received disproportionately high shares of subprime
lending.
- Examine banks’ performance in meeting the needs of all communities they serve, wherever
they conduct business. The CRA needs to be updated given that many banks now lend
nationwide.
- Expand the CRA to cover all institutions making mortgages, including all bank affiliates and
independent mortgage companies, which are currently not covered, but are responsible for
making a substantial share of higher-cost loans.
“It is imperative that we expand federal laws that promote equitable lending and reduce highercost
loans that destabilize communities and lead to high rates of foreclosure,” says Barbara van
Kerkhove of the Empire Justice Center, based in Rochester.
The report may be found at:
www.nedap.org/resources/documents/PayingMoreFortheAmericanDreamIII_Final.pdf
# # #
Collaboration - The Paying More for the American Dream series is a collaborative effort of the
California Reinvestment Coalition, Community Reinvestment Association of North Carolina,
Empire Justice Center, Massachusetts Affordable Housing Alliance, Neighborhood Economic
Development Advocacy Project, Ohio Fair Lending Coalition, and Woodstock Institute. This is
the collaboration’s third annual report examining systematic inequalities in the housing finance
system and their impact on lower-income neighborhoods and communities of color. Previous
reports in the series are available at www.nedap.org/resources/reports.html
NEDAP, an economic justice resource and advocacy center, has been at the forefront of
combating abusive and discriminatory lending practices in New York City and State.
For more information, please visit www.nedap.org.
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