This legislative overhaul, a long-awaited transformation, was led by the Federal Reserve, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corp.
Mortgage lender regulations, established under the Community Reinvestment Act (CRA) of 1977, have been significantly modernized by banking regulators, marking a pivotal shift in the fight against discriminatory lending practices, known as redlining
The original CRA was designed to compel banks to meet the credit needs of communities in which they operate, particularly in low- and moderate-income areas. However, the previous set of rules, which had remained largely unchanged since the early days of the internet, have been unable to keep pace with the evolving financial landscape.
The new mortgage lender regulations not only address the physical presence of banks but also extend oversight to their digital footprint, encompassing online and mobile banking activities. This crucial update aims to rectify inequities persisting in mortgage lender regulations and small business lending that continue to impact marginalized communities, still bearing the scars of historical financial discrimination.
Disturbingly, despite the 1968 Fair Housing Act and the subsequent CRA, the homeownership gap between Black and non-black individuals remains wider today than in 1960
Recent data reveals that Black borrowers are underserved in low- and moderate-income neighborhoods, with disparities in lending persisting across various communities. The revised CRA mortgage lender regulations are expected to instigate substantial changes in the mortgage lending landscape, aiming to bridge these gaps and foster equitable access to credit for all communities, transcending the boundaries of physical and digital banking. These changes are not only long overdue but deemed essential in the ongoing struggle for financial justice.
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