Special Lending Programs
||Robert B. Avery, Raphael W. Bostic,
Glenn B. Canner
||One section of the survey mandated
by the Gramm-Leach-Bliley Act asked banking institutions for information
on lending programs established to enhance CRA performance. The authors
examine the responses to this section of the survey and provide information
on the nature of these programs and how their characteristics influence
their performance and profitability. Because 72 percent of the programs
were devoted to single family mortgage lending, this article focuses
on CRA special mortgage programs.
|| The two most frequently
cited reasons for establishing CRA special mortgage programs were
responding to the needs of the local community and promoting community
growth and stability. While obtaining a Satisfactory or Outstanding
CRA rating was cited for three-fourths of the programs, it was cited
as the only reason for just 1 percent of the programs.
|About three-fourths of the programs
involve third parties, mainly to provide grants for down payments.
|CRA special mortgage programs appear
to perform better that overall CRA-related mortgage lending, but the
results are less consistent when compared with an institution's overall
|On average, delinquency and charge-off
rates were higher for CRA special mortgage programs at larger institutions.
|The majority of CRA special mortgage
programs (64 percent) were profitable or marginally profitable
|Number of pages: