Community Investments Vol 23, Issue 1
Doctor CRA

Spring 2011

Author(s): John Olson, Federal Reserve Bank of San Francisco

Dear Dr. CRA –

The last time we heard from you, you mentioned that there were some new rules that were pending on how the CRA might be changed to accommodate the Neighborhood Stabilization Program. My bank has been active in the program and I’ve got a CRA exam around the corner. I need help right away!

Need Status Promptly

Dear NSP –

You’re in luck! The rules that we discussed last time are now final. On December 15, 2010, the agencies issued a press release announcing the final rules regarding the expansion of the CRA to include NSP-related activities. I’ll give you a quick overview here, but if you need all the details, you can find the press release on the Fed’s website. Look under “News and Events” for the press release that contains a link to the Federal Register notice.

The final text of the rule highlights the “pressing need to provide housing-related assistance to stabilize communities.” The rule also notes that “high levels of foreclosures have devastated communities and are projected to continue into 2012 and beyond with damaging spillover effects for low- and moderate-income census tracts, as well as middle-income tracts.” (emphasis added)

The rule as adopted expands the definition of community development to now include loans, investments, or services that support, enable, or facilitate projects or activities that meet the eligible uses criteria of the NSP, and are located in a designated target area in a HUD approved plan, whether or not any NSP funds are used. The activity must benefit low-, moderate-, or middle income geographies in the bank’s assessment area. The activity can also qualify if it falls outside the bank’s assessment area if the bank has adequately addressed the community development needs of its assessment area.

As always, check with your friendly local examiner if you have any questions about the new rule, or if you are uncertain whether it will apply in your situation.

Other articles in this issue

CI Notebook

Prize Linked Accounts for Youth (PLAY): A New Approach to Youth Financial Education and Savings

Community Perspectives: Community Check Cashing

A Promising Way Forward for Homeownership: Assessing the Benefits of Shared Equity Programs

When Investors Buy Up the Neighborhood: Preventing Investor Ownership from Causing Neighborhood Decline

The Neighborhood Stabilization Program: Strategically Targeting Public Investments

Research Briefs

Data Snapshot: The Housing and Mortgage Market