In response to the pressing need to provide housing-related assistance to stabilize communities affected by[IMAGE]
high levels of foreclosures, the federal bank and thrift regulatory agencies recently announced a ""proposed change"":http://occ.gov/ftp/release/2010-66a.pdf to the Community Reinvestment Act (CRA) regulations. This change, the agencies said, would specifically encourage depository institutions to support the Neighborhood Stabilization Program (NSP) administered by ""HUD."":http://portal.hud.gov/portal/page/portal/HUD
Under the NSP, HUD has provided funds to state and local governments and nonprofits organizations for the purchase and redevelopment of abandoned and foreclosed properties. The agencies' proposed change to the CRA
[COLUMN_BREAK]regulations would encourage depository institutions to make loans and investments and provide services to support NSP activities in areas with HUD-approved plans.
According to the agencies, this proposal would supplement existing CRA consideration for community development activities, including neighborhood stabilization activities.
For NSP areas identified in HUD-approved plans, the agencies would provide CRA consideration for activities that benefit both individuals with incomes of up to 120 percent of the area median and geographies with median incomes of up to 120 percent of the area median. However, NSP-eligible activities would receive favorable consideration under the new rule only if conducted within two years after the date when NSP program funds are required to be spent.
Allowing banking institutions to receive CRA consideration for NSP-eligible activities in additional NSP-targeted areas would create an opportunity to leverage government funding targeted to areas with high foreclosure and vacancy rates, and it would also serve the purposes of the CRA, the agencies explained.
Separately, the agencies also announced that they will hold four hearings to consider public comment on all aspects of the CRA regulations during the summer of 2010.