Federal Deposit
Insurance Corporation

From: John Henneberger [mailto:john@texashousing.org]
Sent: Wednesday, October 20, 2004 4:02 PM
To: Comments
Subject: Community Reinvestment -- RIN 3064-AC50

To Whom It May Concern:

Subject:  RIN 3064-AC50

I am writing to express the strong objections of my organization to the above referenced changes related to the Community Reinvestment Act (CRA).

The Texas Low Income Housing Information Service (TxLIHIS) has worked for more than 15 years to expand homeownership opportunities for lower-income Texans. Over this period we have come to understand that the major impediment to increasing homeownership is lack of access to prime home mortgage credit by borrowers in Texas, in particular inner city and rural areas.

In a series of research reports we have published over the past nine years we have noted the extremely high incidence of subprime home mortgage loans in rural Texas and along the Texas side of the Texas-Mexico border. These areas are overwhelming served by small to mid-size financial institutions.

By quadrupling the asset threshold under which banks are defined as small from $250 million to $1 billion, the proposed change eliminates 96% of FDIC-regulated banks from having to perform in three distinct categories: lending, investing and services to low and moderate income communities.  The one area within the proposed changes where there would be continued CRA examination would be in the area of lending.  However, the asset threshold increase to $1 billion only subjects such “small” banks to a much less rigorous lending examination, which we believe will result in many fewer affordable housing loans.

We have documented that these smaller institutions are the very lenders who are best positioned to serve these undeserved markets and yet are, with a very few exceptions, the least likely to provide access to home mortgage credit.

Better and more frequent CRA examinations are the answer. The proposed changes will leave lower-income consumers without any local access to prime mortgage credit.

We urge the rejection of the proposed changes.

John Henneberger, co-director
Texas Low Income Housing Information Service
508 Powell Street
Austin, TX 78703-5122