Stabilization Program to Get CRA Credit

The federal banking and thrift regulators issued a proposal Thursday to expand Community Reinvestment Act regulations to areas with high foreclosure levels.

The proposal would encourage banks to make loans to support activities of the Department of Housing and Urban Development's Neighborhood Stabilization Program.

Through the program, HUD provides funds to state and local governments and nonprofits to purchase and redevelop abandoned and foreclosed properties.

Under the proposal, the regulators would provide CRA consideration for NSP activities that benefit individuals with incomes up to 120% of the area median and geographies with median incomes up to 120% of the area median.

"Allowing institutions to receive CRA consideration for NSP-eligible activities in NSP-targeted areas creates an opportunity to leverage government funding targeted to areas with high foreclosure or vacancy rates," the regulators said in the proposal.

Comments on the proposal are due 30 days after it is published in the Federal Register, which is expected to be soon.

Regulators also sought comment Thursday on ways to update the CRA and announced a series of four hearing in July and August on the issue. The agencies are soliciting opinions on a range of subjects dealing with the law, including if they should revise data requirements for small-business lending designed to meet the needs of low- and moderate-income consumers.

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