The Community Reinvestment Act is worth strengthening to fight discrimination.
Earlier this year, in a large metropolitan area of the eastern United States, two men walked into the same bank branch on the same day, each at different times of the day.
They each came in with nearly identical business backgrounds and strong credit histories, and they each asked about a small business loan of $60,000-$70,000 to expand their business and to possibly hire a part-time employee. There were some key differences, like each man’s name and their company names — and their race.
Overall, black entrepreneurs seeking small business loans faced more scrutiny compared to their equal or less creditworthy white counterparts.
It is hard to imagine how U.S. banks would treat working class communities without the guarantees of the Community Reinvestment Act. But it’s also time to consider an overhaul.
Washington, DC – Today, the National Community Reinvestment Coalition applauded the U.S. Department of Housing and Urban Development’s (HUD) issuance of a rule on the “Implementation of the Fair Housing Act’s Discriminatory Effects Standard.” NCRC President and CEO John Taylor made the following statement: “We applaud HUD for formalizing in their rulemaking that the Fair […]
NCRC Calls For Federal Investigation Into Lenders’ Refusal to Make Loans to Working Class Families
Files 22 Complaints With HUD Over Lenders’ Unfair & Discriminatory Policies
WASHINGTON, DC — The National Community Reinvestment Coalition (NCRC) today called on federal agencies and banking regulators to investigate the nation’s largest Federal Housing Administration (FHA) approved lenders for possible violations of federal housing rules by refusing to offer loans to qualified Americans to the FHA policy of a minimum credit score of 580 and above with a 3.5% downpayment.
A recent NCRC investigation found that the majority of top FHA lenders failed to offer applications for federal-guaranteed loans to potentially qualified borrowers with credit scores below 620 or 640, even though FHA guarantees loans with credit scores to 580. These lenders have policies that establish “credit overlays” above the FHA policy, with minimum credit score requirements as high as 640. One-third of all Americans have credit scores under 620.
“Critical to our nation’s economic progress is the ability of homeowners to get quality refinancing, and for homebuyers to reclaim vacant houses by accessing quality mortgage credit, ” said John Taylor, president & CEO of the National Community Reinvestment Coalition.
“The decision by some banks to not follow the FHA’s policy is cutting qualified borrowers off from accessing credit, and in doing so, causing harm to their ability to prosper, build wealth and for our economy to grow. And this decision is arbitrary, because the loans are 100% guaranteed, whether the borrower’s credit score is 580 or 780. That means the loans with lower credit scores don’t pose additional risk to the company, so there’s no legitimate business defense for this across-the-board practice. A lender is only at risk if they fraudulently or improperly originated the loan, against FHA’s underwriting criteria. As is the case across the secondary market, in that situation, the lender can be forced to buy back the bad loan,” said Taylor.
An investigation by the National Community Reinvestment Coalition (NCRC) discovered that a majority of the top 50 FHA lenders have instituted policies that limit access to credit to working families in low- and moderate-income communities, and in communities of color, the very same communities that have been most harmed by the greed and malfeasance of […]
NCRC Mission Statement NCRC and its grassroots member organizations create opportunities for people to build wealth. We work with community leaders, policymakers and financial institutions to champion fairness in banking, housing and business development. For a brief summary of NCRC’s programs, please click on the image below.
Since the last review of the Home Ownership and Equity Protection Act (HOEPA) by the Federal Reserve Board, the home mortgage market has changed considerably. Subprime lending has become a dominant force, unregulated mortgage brokers now originate a large part of the mortgages, and exotic mortgages with exploding interest rates have become a common occurrence. […]
Programs NCRC provides a broad set of benefits and special services for its member organizations, including customized data analysis, training, technical assistance, legislative and regulatory updates, and more. Our portfolio of programs and services includes: POLICY ADVOCACY One of NCRC’s most important missions is to give its members a strong presence before Congress. Through direct […]