The Community Reinvestment Act of 1977 (CRA) was the last of a series of housing-related legislative actions emerging from the Civil Rights era. It was enacted to combat redlining, although race is not mentioned in the original statute. Regulators have used low and moderate incomes (LMI) as a proxy for race with respect to people and neighborhoods. However, as awareness of the racial gaps in homeownership, wealth, and income increases, federal bank regulators are deliberating a major revision of CRA regulations that could include a more explicit inclusion of race. In this report, we examine the overlap between current CRA lending for purchase mortgages to LMI borrowers and neighborhoods and lending to minority borrowers and minority neighborhoods. We evaluate how well current LMI lending fosters lending to minority neighborhoods and how well it fosters lending to minority borrowers. In short, they don’t overlap very well. This paper considers the benefits and complexities of several possible strategies to bring explicit consideration of race into the CRA regulations.
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