What CRA is Really About

Like a cat with nine lives, CRA has gone through a series of permutations with change each time that seems to reach the very core of CRA. Such change can leave bankers wondering what CRA is really all about and when the next change will occur.

First, there was the cycle of experimentation when both regulators and institutions alike struggled with what this vague law was supposed to be all about. Next came the cycle of process, complete with its twelve-assessment-step program to measure process. Finally, we have the results cycle when all regulators care about is what happened but not about how much effort it took to get there.

CRA is really about making every neighborhood a better place to live. Although the early and still the primary emphasis of CRA is on mortgage lending, CRA is about more than housing and housing loans. CRA is about the entire economy of a neighborhood. CRA is about economic development. It is about the development and maintenance of everything that keeps a neighborhood economy vital and the neighborhood a desirable place to live. This means public and private services, stores, jobs and homes.

Without services, stores, and jobs, there is little reason to live in a neighborhood. A healthy local economy is essential. Because financial institutions play a critical role in the economy of any neighborhood, they are the focus of CRA.

FNMA chose the 25th anniversary of CRA to implement an award program recognizing efforts of financial institutions inspired by CRA. The award program looks at much more than CRA "compliance." The award program looks at the whole effort and the full scope of results.

FNMA presented the first "Community Impact Awards" to two deserving recipients at PCi's fifth annual CRA and Fair Lending Colloquium. The work of both winners went way beyond compiling data correctly, reporting it on time, and making enough loans in the right places to count for CRA.

The awards went to two CRA managers and their institutions who committed time, resources, skill, and determination to projects that improved housing and economies for low and moderate income members of their communities.

Kendra Waggoner and First Federal Savings and Loan Association of Port Angeles, Washington, were recognized for a housing program with the Lower Elwha S'Klallam Tribe. The project is a complex interaction of the S&L, the tribe, and the Department of Housing and Urban Development. Waggoner worked with the tribe and with HUD to develop the 100% financing program.

The tribe guarantees the loans against default. By involving the tribe in this guarantee, the tribe maintains the land and house as tribal property but also protects the financial institution's risk. The tribe gains housing for tribal members. By increasing housing, the tribe hopes to attract members back to the community. With the return of skilled tribal members, the tribe also increases its opportunities for further economic development. In this project everyone wins, but it took a great deal of effort to bring everybody to the table and work out the details.

Dawn Coursey and the First National Bank Alaska were recognized for the special effort to reach rural villages in the Alaskan Arctic with housing and banking opportunities. First National Bank Alaska identified Alaska Native villages with a need for banking services and housing. Putting HUD's Title VI Loan Program to work, the bank brought the first new housing construction to these villages in more than 20 years. The housing is followed by banking services including first accounts for consumers and small business lending. For villages located inside the Arctic Circle, these services provide a new lifeline.

Copyright © 2002 Compliance Action. Originally appeared in Compliance Action, Vol. 7, No. 13, 11/02