CRA Agreements Do Work

A study for the University of Southern California's Lusk Center for Real Estate reveals that Community Reinvestment Act agreements between lenders and community groups appear to be working to the benefit of both lenders and the communities.

The study found rapid increases in conventional mortgage lending in those communities. One of the study's authors, Dr. Raphael Bostic, director of the Casden Real Estate Economics Forecast, also said that while banks see the CRA agreements as insurance against the costs of possible fair-lending violations, the community groups are using CRA to spur homeownership among low-income groups. Dr. Bostic also said community group pressure has served lender interests by encouraging development of innovative lending products.

More than 300 CRA agreements have been reached since the 1980s. While no government monitoring of these agreements occurs, Dr. Bostic said savvy community organizations have developed their own methods of monitoring. The study can be viewed at www.usc.edu/schools/sppd/lusk/research/papers. The study number is wp-2002-1007.pdf.

Copyright © 2002 Bankers' Hotline. Originally appeared in Bankers' Hotline, Vol. 12, No. 9, 12/02