Title
Commending the Federal Reserve Bank of Philadelphia's Research Department for its important analysis of the effects of the Community Reinvestment Act (CRA) on the mortgage market in the aftermath of the Great Recession and urging the City's Department of Planning and Development to identify potential solutions to recent federal policy changes that have resulted in more Philadelphia neighborhoods becoming CRA ineligible, leading to CRA-regulated lenders decreasing their mortgage lending in these neighborhoods.
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WHEREAS, The Community Reinvestment Act (CRA) was enacted in 1977 to encourage federally regulated depository institutions to meet the credit needs of all communities, including those of low- and moderate-income (LMI); and
WHEREAS, CRA provides a "carrot" to depository institutions by providing them with a good CRA rating if they have a solid record of providing loans and other financial products and services to LMI neighborhoods. In turn, having a satisfactory or better CRA rating is desirable when banks apply for a merger, acquisition, or branch opening, in addition to the reputational considerations; and
WHEREAS, The aftermath of the Great Recession resulted in a dramatically changed mortgage market, which shifted from a market dominated by large banks to one in which more loans are originated by nondepository institutions. However, CRA-regulated lenders remained an invaluable resource in LMI neighborhoods; and
WHEREAS, In 2013, the Office of Management and Budget published a new set of metropolitan statistical area/metropolitan division (MSA/MD) definitions. According to the revised MSA/MD definitions, the previous five-county Philadelphia MD was split into the new Philadelphia, PA MD (Philadelphia County and Delaware County) and the Montgomery County-Bucks County-Chester County, PA MD (MBC MD); and
WHEREAS, A recent report by the Federal Reserve Bank of Philadelphia's Research Department analyzes the impact of OMB's revision...
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