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FOS Blog

10 Jan

CRA Overhaul Coming

CRA Overhaul Coming!

Bankers have been under regulatory siege for the last few years with major changes involving mortgage servicing, new TILA/RESPA disclosures, and a total HMDA overhaul – with little opportunity to influence those changes.  The OCC is now leading the charge (on behalf of all regulators) for Community Reinvestment Act (CRA) regulatory overhaul from the outdated standards of 1977.

They are seeking ways to modernize this regulation and make it more effective in achieving the desired results.  Times have changed. Technology has changed.  Marketing areas have changed.  Society has changed.  All these changes make the regulation difficult to comply with and it fails to adapt to these changing conditions.  They are requesting feedback on:

  • Increasing lending and services to LMI people who need it most.
  • Expanding the types of activities eligible for CRA consideration.
  • Revisiting how assessment areas are defined and used.
  • Establishing metric-based thresholds for CRA ratings.
  • Making CRA performance more transparent.
  • Reducing the cost & burden related to CRA performance.

In case that you missed submitting your own comments (deadline closed on November 19), know that the ABA has responded on behalf of all bankers.

Some of their opening comments include:

  • We are optimistic that banks, regulators, communities, and other interested parties will be able to find common ground to improve the effectiveness and administration of CRA.
  • It is important that the prudential banking agencies issue uniform CRA regulations and examine banks in a consistent manner.
  • Our comments outline a variety of options recommended by banks with a wide range of business models, asset sizes, and geographic locations. We discuss the pros, cons, and questions associated with these ideas.
  • We offer these in strong support of this review effort and with the intention to promote the development of valuable reforms.

Their comments focus on these themes:

  • Incorporating technology and innovation.
  • Tailoring business models and geographies.
  • Improving consistency and predictability.
  • Addressing market distortions.

This letter is a “must read” for CRA Officers and their Compliance Committees.  There will be another time to comment when the proposed regulation is published, and you’ll want to be well versed.  You won’t want to miss this ever-important opportunity to be heard.

The ABA letter can be found at