The federal bank and thrift regulatory agencies have announced changes to Community Reinvestment Act (CRA) regulations to support the stabilization of communities affected by high foreclosure levels.
The final rule is substantially the same as the proposal published for comment in June, the agencies say. It encourages depository institutions to support eligible development activities in areas designated under the Neighborhood Stabilization Program (NSP), which is administered by the U.S. Department of Housing and Urban Development (HUD).
Under the NSP, HUD has provided funds to state and local governments and nonprofit organizations for the purchase and redevelopment of abandoned and foreclosed properties. The new rule encourages depository institutions to make loans and investments, as well as provide services to support NSP activities in areas with HUD-approved plans.
NSP-eligible activities will receive favorable consideration under the new rule if they are conducted within two years after the date when NSP program funds are required to be spent.
Allowing banking institutions to receive CRA consideration for NSP-eligible activities in additional NSP-targeted areas serves the purposes of the CRA and creates an opportunity to build upon government programs in areas with high rates of foreclosure and vacancy, bank regulators say. CRA consideration is not limited to activities actually receiving NSP funds and may include other eligible activities in NSP plan areas.
The final rule will become effective 30 days after the date of its publication in the Federal Register, which is expected shortly.
SOURCE: Federal Deposit Insurance Corp.