It’s no time to weaken the Community Reinvestment Act

WE PURCHASED HOMES in Mattapan, Brockton and Hyde Park. We were able to afford these homes because of a great program called ONE Mortgage available through local lenders and the Massachusetts Housing Partnership. We benefited from a lower down payment requirement, no private mortgage insurance, and an affordable, below-market interest rate.

But what was not immediately known to us is how much we owe our homeownership success to the Community Reinvestment Act. Passed by Congress in 1977, CRA has resulted in billions of dollars in responsible lending to formerly redlined communities. Thanks to enforcement from regulators and grassroots enforcement from community organizations, CRA is a success story.

In Massachusetts, more than 22,000 homebuyers have purchased their first home thanks to the same mortgage program we used to buy ours. Fifty-one percent have been households of color and 100 percent are low-to-moderate income. Many are first-generation homebuyers. And delinquency rates are lower than those for all Massachusetts mortgages for all incomes. CRA was the law that convinced the banks to create and offer this program and to continue it for nearly 30 years.

Now, CRA is threatened by the Trump administration. They can’t get rid of the law, but they are hellbent on gutting the regulations that are used to enforce it. Joseph Otting, the chief federal banking regulator, was the CEO of a major West Coast bank when it was sanctioned due to its poor CRA rating.

CRA is the reason we are homeowners and why we are building wealth for our families. In 2015, the Federal Reserve Bank of Boston, Duke University, and The New School conducted a study and found that “Nonwhite households [in Boston] have only a fraction of the net worth attributed to white households. While white households have a median wealth of $247,500, US blacks have a median wealth of $8.” Eight dollars.

We are making a dent in that sordid history of redlining and discrimination because of a strong and vital Community Reinvestment Act. Otting and others in the Trump administration want to weaken it and make it easier for banks to comply. The centerpiece of their so-called “reform” proposal is a “one ratio test” that removes all nuance from CRA. Make a single $50 million loan to a business located in a low-income community and that could replace 250 mortgages to lower-income families. Under the current CRA, community development lending and mortgage lending are evaluated independently and most banks do both. Under Otting’s proposal, banks are likely to take the path of least resistance and homebuyers and neighborhoods will be left behind.

Federal Reserve research concluded that home mortgage lending in lower-income neighborhoods  would drop by up to 20 percent in the absence of CRA. That would be a lot fewer homeowners like us. And fewer wealth building opportunities. And less transfer of generational wealth that we anticipate passing on to our children.

Weakening CRA is anti-family and anti-neighborhood, especially now in the wake of COVID-19. We have committed ourselves to paying it forward and assisting other families who hope to do what we did and buy a home in a challenging Greater Boston housing market. First-time and first-generation homebuyers will be crucial to our economic recovery post-COVID-19. They need all the help they can muster. Affordable mortgage lending from banks is a critical need now and in the future. The only way to ensure that is to ensure a strong, dynamic and responsive Community Reinvestment Act.

Early last month was the deadline for comments to federal regulators on the proposed change. We call on those regulators to go back to the drawing board and scrap plans to weaken this important law.

Symone Crawford is the Director of Homeownership Education at the Massachusetts Affordable Housing Alliance (MAHA). Esther Dupie is president and Thadine Brown is vice president of MAHA.