Everybody’s Business

May 27, 2016

The Community Reinvestment Act

CDFIs help banks meet CRA requirements

The Community Reinvestment Act (CRA) was passed by Congress in 1977 as part of an effort to ensure banks met the credit needs of all communities. The Act established a community reinvestment standard for banks to follow. Each bank is evaluated regularly by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corporation (FDIC), or the appropriate Federal Reserve Bank depending on bank charter. These agencies evaluate each bank based on size criteria and assign a grade ranging from Substantial Noncompliance to Outstanding, reflective of how well they are meeting credit needs of borrowers in their service areas. These grades are critical to a bank's growth since a negative rating can slow or even prevent a bank from merging or expanding.

In an attempt to strengthen the regulations and ensure the CRA is an effective tool for getting credit to all communities and their borrowers, the bank regulators issued revised regulation in 1995. Since these changes, banks have become the fastest-growing lending source to CDFIs. A figure from CDFI Futures: An Industry at a Crossroads by Jeremy Nowak displays this trend. As the graph points out, since 2001, banks have dramatically grown as the provider of debt capital to CDFIs.

Like many CDFIs, CRF has benefited from this trend. Throughout our history, banks have been a key partner for CRF. Since our inception in 1988, we have partnered with more than 30 banks, securing more than $214 million in the form of Program Related Investments (PRIs), Equity Equivalent Investments (EQ2s), grants and other sources.

CRF is always looking for innovative ways to work with banks to support communities. In 2014, CRF authored a comment letter to the Bank Regulatory Agencies, urging them to give positive consideration for banks that have developed structured referral relationships with CDFIs. When a prospective borrower falls just outside of a bank's lending requirements, it can often mean the end of a dream for an entrepreneur but a referral relationship can change that outcome. We believe banks that refer their "near misses" to partner CDFIs should be rewarded for their efforts to help borrowers find appropriate credit products. To learn more read our comment letter on the topic.

Posted by: CRFUSA

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May 26, 2016

Own Sweet Own: Detroit Home Mortgage

Thanks to funding support from the Kresge Foundation, the Ford Foundation,
Michigan State Housing Development Authority and Huntington, FirstMerit, Flagstar, Talmer and Liberty Banks, CRF was able to launch Detroit Home Mortgage. Read below to find out how it will help increase home ownership in the city of Detroit.

The Problem

While there were a significant number of vacant and inexpensive homes in the city of Detroit, buying a home had one major road block - getting a mortgage large enough to fix up the home. Often the buyer qualified for a loan, but the home did not because its appraised value was too low.

In 2014, 88% of homebuyers in the city of Detroit paid cash and approximately 80% of applications were denied for conventional and FHA-backed home improvement loans. Federal lending guidelines did not clearly allow banks to loan borrowers enough money to cover necessary repairs because the loan amount was limited to the low, appraised value of a house. Many potential homebuyers had good credit scores and stable incomes, but could not get a large enough mortgage because the appraiser could not find a similar home nearby with a comparable sales price. The lack of financing forced many families either to pay cash or to rent instead of building equity and investing in their futures.

The Solution

At the urging of Detroit Mayor Mike DHM imageDuggan, a diverse group of partners including the Obama Administration's Detroit Federal Working Group, Clinton Global Initiative, local banks, foundations and non-profits joined forces to find a solution to the appraisal and financing gap. Led by Community Reinvestment Fund, USA, (CRF) who is now administering the fund, a group of partners developed this innovative new program that aims to increase homeownership and reinvestment in Detroit's neighborhoods.

Detroit Home Mortgage addresses the appraisal value gap associated with the renovation of properties by combining a second mortgage with a conventional first mortgage to assist in the funding of rehabilitated single family properties. The end goal is to increase the number of mortgages, eventually bringing back the conventional mortgage market and making Detroit Home Mortgage unnecessary.

It was a Collaborative Effort

Thanks to all of our partners. The development of Detroit Home Mortgage wouldn't have happened without you!

Detroit Mayor Mike Duggan

Clinton Global Initiative

The Obama Administration's Detroit Federal Working Group

Huntington Bank

Flagstar Bank

Talmer Bank and Trust

FirstMerit Bank

Liberty Bank

The Kresge Foundation

The Ford Foundation

Michigan State Housing Development Authority

Southwest Economic Solutions


Krysta Pate Leads Detroit Home Mortgage

Krysta_digital onlyCommunity development expert Krysta Pate is the Program Director for Detroit Home Mortgage, working out of CRF's office in the historic Ford Building in downtown Detroit.

Krysta comes to Detroit Home Mortgage from the Detroit Land Bank Authority where she worked closely with community partners, banks, homebuyer counseling agencies, realtors and government agencies. She is also a member of the national task force charged with improving mortgage conditions in Detroit.

"I have spent my entire career working to strengthen neighborhoods and create housing solutions for families," said Krysta. "It's great to see banks, government officials, nonprofits, and realtors collaborate in this groundbreaking and important step towards a real solution for the Detroit real estate market."

Krysta can be reached at Krysta@crfusa.com or 313.335.4038


Posted by: CRFUSA

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May 23, 2016

Community Reinvestment Fund, USA Receives $2 Million Grant From Sam's Club Giving Program

The grant will help CRF reduce loan acquisition costs and provide new technology solutions to other mission-driven lenders

MINNEAPOLIS - May 18, 2016 - Community Reinvestment Fund, USA (CRF), a Minneapolis-based national non-profit and Community Development Financial Institution (CDFI), has been awarded a $2 million grant from Sam's Club Giving Program. The grant will help CRF increase access to capital for underserved small business owners by growing the capacity and capability of other mission-driven lenders through helping them streamline processes and reduce costs directly associated with loan origination.

"We are honored by this latest grant from the Sam's Club Giving Program," said Frank Altman, President and CEO of CRF. "Their steadfast and continued support is critical to our efforts to create jobs and strengthen neighborhoods by delivering much needed financing to underserved small businesses."

Sam's Club Giving Program awarded more than $8 million in grants to eight organizations through a five-year Small Business Mobility Initiative. The Initiative, which is in its second year, is aimed at bolstering community lending resources and unlocking access to affordable capital for America's underserved small business owners.

"Sam's Club has a long history of helping small businesses get access to big business savings, save money and grow their businesses--that's the reason our founder Sam Walton started Sam's Club in 1983," said Kathleen McLaughlin, Walmart's Chief Sustainability Officer and President of the Walmart Foundation, which oversees the Sam's Club Giving Program.  "When small businesses succeed, economic growth and job creation follow, which is why Sam's Club and the Sam's Club Giving Program are committed to creating small business prosperity by awarding grants to national nonprofit organizations that help to increase access to capital and better education for underserved business owners across the U.S."

About CRF
Community Reinvestment Fund, USA (CRF), a non-profit organization and certified Community Development Financial Institution (CDFI), is a national leader in bringing capital to underserved areas. Founded in 1988, CRF has injected more than $2 billion into low-income and economically disadvantaged communities around the country to help stimulate job creation and economic development, provide affordable housing, and support community facilities. CRF is headquartered in Minneapolis, MN. For more information, visit www.crfusa.com.

About Sam's Club and the Sam's Club Giving Program
Sam's Club, the nation's eighth largest retailer and a leading U.S. membership club, offers savings and surprises to millions of members in 652 U.S. club locations and at SamsClub.com. The Sam's Club Giving Program was established by the Walmart Foundation in 2008 and has a focus on small business support. Sam's Club and the Sam's Club Giving Program, have granted $28 million since 2011 in support of micro- and small business growth. In addition, Sam's Club provides annual community grants to a variety of nonprofits, offers associate volunteer programs, and donates products to local food banks. For more information visit SamsClub.com/giving.

press release

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Posted by: CRFUSA

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