The Morning Call, October 21, 2018: Your View: Law promotes homeownership in poor Lehigh Valley neighborhoods. Why weaken it?
In 1989, Bill Dedman, a reporter at the Atlanta Journal-Constitution, wrote a Pulitzer Prize-winning expose on mortgage lending that exposed distressing disparities in mortgage lending between households of color and their white counterparts.
His work inspired Community Action Committee of the Lehigh Valley to take a close look at mortgage lending here in the Lehigh Valley market.
We found that people of color were about five times more likely to be rejected than their white counterparts. Equally distressing, was that people of color were not even applying for mortgages; they knew the system didn’t work for them.
We turned the information over to The Morning Call, which did a terrific article on the data we had uncovered. Banks were, to say the least, embarrassed.
The embarrassment brought them to the table. Together, we developed some prescriptive measures to correct the problem: outreach to low- and moderate-income families to get them to apply; a homeownership counseling program that would teach people how to buy a home responsibly.
Within four years, the disparity went from a factor of five to just 30 percent. Working together, we were literally changing the complexion of homeownership in the Lehigh Valley.
Embarrassment was a powerful tool. But so was an obscure 1977 federal law called the Community Reinvestment Act.
After federal funding, CRA is easily the most powerful tool community development organizations like CACLV have for tackling poverty. Those of us in the housing, community and economic development world have used CRA as effectively as any community in the country has.
Not surprisingly, the man in the Oval Office has targeted CRA for reform. They’re calling it “modernization,” probably because it sounds better than “turning back the clock” or “gutting” it.
Some bankers say they understand the importance of CRA but they think it is an administrative burden. I would love to be sympathetic but have you seen how much money most banks are making these days?
CRA does not require them to lose money serving poor people; in fact, safety and soundness always have and always will trump (ironic choice of words, eh?) CRA. But this law has made our communities more vibrant and more fair. How can anyone oppose that?
If you want to help fight back, go to the National Community Reinvestment Coalition’s website (ncrc.org), where you will find resources to help you comment on the proposed rules. It will only take a few minutes and, I assure you, it will make a huge difference.
