MarketWatch, May 18, 2018: Fed official: Banks need to help rent-burdened customers save for homeownership.
A top Federal Reserve official said Friday that regulators must use the coming update of the Community Reinvestment Act to encourage banks to do more to help rent-burdened customers.
The Fed and other regulatory agencies are preparing to revamp the CRA, a 1977 law designed to overcome decades of “red-lining” that effectively blocked access to credit and home ownership for low-income Americans, particularly people of color. Under the law, banks are graded on how much credit they provide to low-income neighborhoods.
In the effort to renew the law, agencies “should do more to encourage banks to offer deposit and credit products designed to help rent-burdened customers save for homeownership and build strong credit scores that will enable them to succeed in obtaining mortgage credit on favorable terms,” said Fed Gov. Lael Brainard, in a speech to the Association of Neighborhood and Housing Development conference in New York.
