The FRB, FDIC, OCC and OTS (the “Agencies”) issued a joint final rule (the “Rule”) amending their Community Reinvestment Act (“CRA”) regulations to support stabilization of communities adversely affected by high foreclosure levels. The Rule encourages depository institutions to support eligible development activities in areas designated under the Neighborhood Stabilization Program (the “Program”) administered by the Department of Housing and Urban Development (“HUD”). Under the Program, HUD has provided funds to state and local governments and nonprofit organizations for the purchase and redevelopment of abandoned and foreclosed properties. Specifically, in the Rule, the Agencies revised the term “community development” to include loans, investments and services by financial institutions “that support, enable or facilitate projects or activities that meet the ‘eligibility uses’ criteria described in Section 2301(c) of the Housing and Economic Recovery Act of 2008” and are conducted in designated target areas identified in plans approved by HUD under the Program. The Rule provides consideration for the award of CRA credit by the Agencies for depository institutions under the Program that benefit low-, moderate- and middle-income individuals and geographic Program target areas designated as “areas of greatest need.” In addition, the Rule provides that a financial institution that has adequately aided the community development needs of its own assessment area may receive CRA credit for Program eligible activities outside of its assessment area. The Rule will become effective 30 days after its publication in the Federal Register.
Alert December 21, 2010