The Consumer Bankers Association (CBA) said the proposed rulemaking to amend the Community Reinvestment Act (CRA) is confusing and will not adequately serve the purpose of the act.
The proposal would require financial institutions to combine home equity lending data with home mortgage lending data when reporting it to regulators. Given these two loan types service entirely different consumer needs, CBA strongly believes merging this data will only serve to degrade the quality and limit the usefulness of the information regulators receive when conducting CRA exams.
“Collapsing home equity products into the broader definition which includes refinances, home purchases, and home improvement will do much to confuse the mortgage data and little to advance the purposes of CRA,” CBA’s Regulatory Counsel Stephen Congdon wrote in a letter to the regulators proposing the amendment, Office of the Comptroller of the Currency, Federal Reserve Board, and Federal Deposit Insurance Corporation
“The CRA was based on the principle that banks have an affirmative obligation to serve their entire community, including low-and-moderate income communities. Treating home equity products in the same manner as purchase money mortgages or other real estate secured lending fails to address the significant differences in the availability and use of these products across different geographies and incomes,” Congdon added.