Off About Investment Instruments
Variable Rate Demand Notes and Auction Rate Securities
offer investors the opportunity to invest in short duration assets that
have community development as their primary purpose. These securities
are an attractive alternative for investors that help satisfy CRA requirements,
while mitigating interest rate risk. Given the current market environment,
investors have an opportunity to take advantage of the spread between
taxable and tax-exempt floating rate securities with only a small yield.
Investors can maximize support for their community development by capitalizing
on these highly rated, liquid securities.
Multifamily mortgage-backed securities issued by
Ginnie Mae offer investors the opportunity to purchase AAA-rated securities
that provide prepayment protection in times of falling interest rates.
Ginnie Mae multifamily MBS increase the supply of mortgage credit available
for housing by channeling funds from the capital markets into the mortgage
market. Ginnie Mae guarantees the timely payment of principal and interest
on the securities. Ginnie Mae securities are full faith and credit obligations
of the U.S. Government and carry zero percentrisk-based capital weightings.
Barbara VanScoy describes these instruments in detail
in two articles, including an analysis of the size of the market for these
instruments, how they work, and how they can be used for community development
for CRA Investment Test credit.
Barbara Rose VanScoy is a principal at CRAFund Advisors,
the registered investment advisor for the CRA Qualified Investment Fund.
Ms. VanScoy is the portfolio manager of the CRA Qualified Investment Fund,
and is responsible for researching and documenting qualified investments
on behalf of the Fund's shareholders. Prior to joining CRAFund Advisors,
Ms. VanScoy was the director of research at SunCoast Capital Group. She
also headed SunCoast's Community Development Initiative, in which she
assisted their depository clients with community development investing.
Want to know more? See Investing in CRA-qualified
Municipal Securities by Barbara VanScoy and Mortgage-backed
securities and Collateralized Mortgage Obligation: Prudent CRA Investment
Opportunities in Community Investments, March 2002.
Special feature: excerpts
of an interview with community development professionals about the future
of the Investment Test.