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FDIC Federal Register Citations Housing Assistance Council January 9, 2006 Office of the Comptroller of the Currency 250 E St. SW Mailstop 1-5 Washington DC 20219 Docket No. 05-17 RIN #3064-AC97 Robert E. Feldman Executive Secretary Attention: Comments Federal Deposit Insurance Corporation 550 17th St. NW Washington, DC 20429 RIN #3064-AC97 Jennifer J. Johnson Secretary, Board of Governors of the Federal Reserve System 20th Street and Constitution Avenue, NW Washington, DC 20551 Docket No. OP-1240 To Whom It May Concern: The Housing Assistance Council (HAC) is a national nonprofit intermediary that improves housing conditions for the rural poor with an emphasis on the poorest of the poor in the most rural places in the country. HAC appreciates that the federal banking agencies are considering adjusting the guidance relating to the Community Reinvestment Act (CRA) to address revisions that have been made to the regulations that implement CRA. HAC believes that CRA has been instrumental in increasing lending and investing to rural communities across the country. Making necessary changes to the Interagency Questions and Answers to ensure that CRA continues to be an effective tool in rural communities is imperative. Overall, HAC supports the outlined criteria that will be used to identify a distressed or underserved rural middle-income census tract. Updating the list of these census tracts on an annual basis will ensure that these communities continue to meet the criteria outlined. However, the proposed question and answer that provides CRA points for financing middle- and upper-income housing developments in distressed rural middle-income census tracts should be changed. The proposed guidance would allow the agencies to provide credit for mixed-income housing developments. HAC acknowledges that mixed-income housing helps to overcome segregation by income and is an activity worthy of CRA points, if the housing contains an adequate number of low- and moderate-income families. HAC is concerned that banks could receive significant CRA points for financing middle- and upper-income housing and this potential should be eliminated. Instead, points should be provided for mixed-income housing that addresses low-income housing needs first and foremost. The proposed guidance could encourage lenders to emphasize community development that supports low-income housing by structuring a point allocation system that is based on the extent to which the project meets low-income housing needs. The regulators may also want to use the Interagency Question and Answer document to provide examples of rural housing program opportunities. Similarly, awarding CRA points for financing certain infrastructure projects that service low- and moderate-income families is acceptable; however, the CRA examiners should quantify the number of low- and moderate-income families that are expected to use the infrastructure in question. Additional CRA points should be awarded for infrastructure that has the most direct benefits to low-and moderate-income families. Meeting the community development needs of communities impacted by natural disasters is challenging. It is appreciated that the agencies have clarified how banks will receive favorable consideration in their Community Reinvestment Act (CRA) exams for financing community development activities in geographical areas impacted by natural disasters. It is encouraging that the federal agencies direct banks to focus on low- and moderate-income families in these areas. The agencies are providing more weight or credit to community development activities that are most responsive to the needs of low- and moderate-income individuals that have been impacted by the natural disaster. The proposal to provide CRA points for investments that benefit families displaced by disasters also promises to be very beneficial to rural areas, in particular, that are now home to a families that cannot return home after Hurricane Katrina and future natural calamities. It causes some concern, however, that other proposed questions divert bank financing to middle- and upper-income housing. CRA should be implemented in a manner that maintains the laws central objective of ending redlining and expanding access to credit for low- and moderate-income families and communities. The proposed questions on community development services provide an important emphasis on low-cost banking services for low- and moderate-income consumers. Low-cost checking accounts, electronic transfers, and remittances provide critical alternatives to payday loans and other high cost fringe products. Low cost banking services enable low-income consumers to save and build wealth in contrast to usurious products that strip wealth. Once these proposed questions are finalized, the agencies should consider providing CRA points for low-cost banking services and also penalizing those banks that continue to offer abusive products such as bounce protection, whose wealth stripping features are not advertised clearly to consumers. The CRA provision of service criterion for mid-size banks with assets between $250 million to $1 billion should be clarified in the Interagency Questions and Answers. It should be made clear that this exam criterion, which assesses a banks provision of services through branches and other facilities, includes an examination of the number and percent of branches in low- and moderate-income communities. A recent Federal Reserve study shows that racial disparities in high cost lending are lessened when banks conduct the lending through branches as opposed to using brokers. Thus, locating branches in low- and moderate-income communities is vital to promoting fair and equitable access to credit. The most effective way to expand access to credit to underserved borrowers is by implementing rigorous and comprehensive CRA exams that maintain focus on meeting the credit and deposit needs of low- and moderate-income borrowers and communities. Responding to these comments on the proposed Interagency Question and Answers will make CRA exams more rigorous. Thank you for consideration of our comments. Sincerely, Moises Loza Executive Director
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Last Updated 01/09/2006 | Regs@fdic.gov |