Agencies Propose CRA Expansion To Encourage NSP Participation

Posted by Orb Staff on June 18, 2010 No Comments
Categories : Residential Mortgage

deral bank and thrift regulatory agencies have proposed a change to the Community Reinvestment Act (CRA) regulations they say would support the stabilization of communities affected by high foreclosure levels. The proposed change specifically would encourage depository institutions to support the Neighborhood Stabilization Program (NSP) 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 agencies' proposal would encourage depository institutions to make loans and investments and provide services to support NSP activities in areas with HUD-approved plans. The proposal would supplement existing CRA consideration for community development activities, including neighborhood stabilization activities. For example, for NSP areas identified in HUD-approved plans, the agencies would provide CRA consideration for activities that benefit individuals with incomes of up to120% of the area median and geographies with median incomes of up to120% of the area median. NSP-eligible activities would receive favorable consideration under the new rule only if 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 creates an opportunity to leverage government funding targeted to areas with high foreclosure and vacancy rates and also serves the purposes of the CRA, the regulators say. Separately, the agencies have also announced they will hold [link=http://occ.gov/ftp/release/2010-65.htm]four hearings[/link] to consider public comment on all aspects of the CRA regulations. The agencies are encouraging the public to provide oral or written testimony on potential changes to the CRA regulations at the hearings. The planned hearing dates and cities are as follows: [list] July 19, Arlington, Va.;*Aug. 6, Atlanta;*Aug. 12, Chicago; and*Aug. 17, Los Angeles.[/list] Anyone wishing to submit testimony or attend the hearings must register five business days in advance on the website of the Federal Financial Institutions Examination Council (FFIEC) at [link=http://www.ffiec.gov/cra/hearings.htm]www.ffiec.gov[/link]. Hearing details are available on the site and in the attached hearings notice, which will be published in the Federal Register. In addition to offering an opportunity for testimony at the hearings, the agencies are encouraging any individual to provide written comments on the CRA regulations to any of the agencies through Aug. 31. SOURCE: [link=http://occ.gov/ftp/release/2010-66.htm]Office of the Comptroller of the Currency

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