HAG submits comments on the Community Reinvestment Act Notice of Proposed Rulemaking

On August 5th, HAG submitted comments on the Community Reinvestment Act (CRA) Notice of Proposed Rulemaking (NPR).  The NPR was issued by the Federal Reserve Board of Governors (Federal Reserve), Office of the Comptroller of the Currency (OCC), and Federal Deposit Insurance Corporation (FDIC) in May 2022 to update how CRA activities qualify for consideration, where CRA activities are considered, and how CRA activities are evaluated. HAG’s comment letter noted that while the Housing Credit finances virtually all new affordable housing, CRA motivates the vast majority of these investments.

The letter expressed concern that the NPR will reduce the incentive that CRA currently provides to invest equity in affordable housing.  In that regard, the HAG comment letter discussed the NPR’s elimination of the separate investment test, noting that the test is the driver of CRA-motivated Housing Credit investment.  The submission urged that the separate investment test be retained but offered mitigating recommendations should it be eliminated.  These included: 1) modification of the community development test subsets; 2) measuring banks’ new equity investments over time; 3) inclusion of an institution-level equity metric and benchmark; and 4) inclusion of the House Credit as an impact review factor.

The comment letter noted support for two elements of the NPR: 1) allowing consideration for the full amount of Housing Credit investments, regardless of the share of affordable units and 2) allowing consideration of community development activities outside of assessment areas.

The HAG comment letter was developed through working groups in which we participated with the Affordable Housing Tax Credit Coalition (AHTCC), the National Housing Conference (NHC) and the ACTION Campaign. We’ll keep you apprised as the regulators submit future notices on the rule making process.