Research Paper

Is the CRA Still Relevant to Mortgage Lending?

September 26, 2019

Authors Susan Wachter Paul Calem Lauren Lambie-Hanson

Current Themes

Is the CRA Still Relevant to Mortgage Lending? - title page

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Overview

This paper explores the evolving role of the Community Reinvestment Act (CRA) in the context of significant shifts in mortgage lending market shares from traditional banking institutions to nonbank lenders. It assesses whether the CRA remains relevant in ensuring broad access to mortgage credit, especially for low- and moderate-income households and neighborhoods.

Key Message

Despite the decreasing market share of banking institutions, the CRA continues to play a crucial role in ensuring access to mortgage credit for low- and moderate-income borrowers and neighborhoods. The analysis shows that while the overall share of loans to low- and moderate-income borrowers has declined, the share of loans for properties in low- and moderate-income neighborhoods has increased, particularly among community banks. This suggests that the CRA remains relevant in promoting equitable mortgage lending practices amidst a changing mortgage origination landscape.