What Proposed Changes to the Community Reinvestment Act (CRA) Could Mean for Memphis CDCs


Proposed changes to the Community Reinvestment Act (CRA) could divert billions of dollars from low- and moderate-income communities. Currently, banks meet their CRA requirements by providing capital for affordable housing, small businesses and economic development in low- and moderate-income neighborhoods. By relaxing standards for the types of investments that qualify for CRA credit, the proposed rules would open the door to discriminatory housing and investment practices – i.e., redlining. Overall, these rules would make financial institutions far less accountable and connected to the communities they are required to serve.

Our team at BLDG Memphis wanted to address the concerns of these proposed changes at the local level by speaking with leaders of our member community development corporations. We asked Charia Jackson, Deputy Director of Frayser Community Development Corporation, to share her perspective on how CRA changes could impact communities across the city. 

What are some examples of how CRA investment has supported your work?      
CRA has supported our work by providing a tool to ensure banks are willing to invest resources in the communities we serve – in low- to moderate-income areas. For example, local banks have worked alongside neighborhood leaders to identify how they could create affordable mortgage loan products that would allow the owner-occupant purchase of homes priced below $50,000. With this loan product in place, it opened the doors for buyers to purchase homes that were previously being purchased only by investors. 

Another way in which CRA has assisted with our work in the community development sector is that it’s allowed for lower interest rate financing for us to produce good-quality affordable homes to sell or rent to low- to moderate-income households.     

How do you think these changes will affect your CDC and others in the Memphis community?                        
If the CRA rules are changed, we believe banks will not be as proactive as they have been in working with the community development industry to solve problems in low- to moderate-income neighborhoods. Additionally, we think they will be less likely to serve those consumers in ways such as creating loan products to serve low- to moderate-income borrowers choosing to purchase lower-valued homes. There would fewer opportunities for homeownership in areas where prices do not meet the bank’s traditional lending guidelines.  

How can people take action to prevent the proposed CRA changes from being put into action?  
People can take action to prevent these proposed changes by making public comments to the regulators, encouraging many others to make comments, and speaking to the facts of how this act has benefited many low- to moderate-income families and individuals in the communities where they live. 

Together, we can protect CRA investment in low-income communities. Submit a comment today. 

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