Securitization of loans and their sale to long-term investors has revolutionized many areas of finance: real estate, autos, consumer credit; but despite many efforts, it has not taken hold in community development financing. The obstacles to creating a secondary market for community development loans are similar to obstacles other markets faced: lack of data, standardization of documents and loan process, and loan volume. Other markets have managed to overcome these obstacles. Yet despite recent advances, the goal of a vibrant secondary market for community development loans seems almost as far away today as it did nearly a decade ago.
The views expressed in this report are those of the authors and do not necessarily reflect the views of the Federal Reserve Bank of San Francisco or the Federal Reserve System.