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Trends in home purchase lending: consolidation and the Community Reinvestment Act


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  • Robert B. Avery
  • Raphael W. Bostic
  • Paul S. Calem
  • Glenn B. Canner
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    Consolidation among banking institutions has substantially changed the structure of the banking industry. Between 1975 and 1997, the number of commercial banks and savings associations declined more than 40 percent. Over the same broad period, the market for home mortgage lending has also changed substantially. Notably, home mortgage lending is no longer primarily the province of banking institutions operating in the communities in which they have banking offices. In recent decades, mortgage and finance companies and banking organizations operating outside their local communities have gained a significant share of the mortgage market. These changes have fueled debate regarding their effects on the provision of home mortgage loans. One particular concern is that, as a consequence of these changes, lower-income and minority borrowers and borrowers in lower-income and minority neighborhoods may face reduced access to mortgage credit. ; This article examines the relationship between consolidation among banking organizations in local markets and changes in home purchase lending over the 1993-97 period, both in terms of total lending and lending to lower-income and minority borrowers and neighborhoods. Because credit availability is believed to be essential to the economic health and vitality of neighborhoods, the article also examines the relationship between consolidation and changes in home purchase lending by institutions in those areas where they have responsibilities under the Community Reinvestment Act.

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    Bibliographic Info

    Article provided by Board of Governors of the Federal Reserve System (U.S.) in its journal Federal Reserve Bulletin.

    Volume (Year): (1999)
    Issue (Month): Feb ()
    Pages: 81-102

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    Handle: RePEc:fip:fedgrb:y:1999:i:feb:p:81-102:n:v.85no.2

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    Keywords: Bank mergers ; Community Reinvestment Act of 1977 ; Mortgages;


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    Cited by:
    1. Robert B. Avery & Raphael W. Bostic & Glenn B. Canner, 2003. "Assessing the CRA's Necessity and Efficiency," Working Paper 8606, USC Lusk Center for Real Estate.
    2. Robert Avery & Katherine Samolyk, 2004. "Bank Consolidation and Small Business Lending: The Role of Community Banks," Journal of Financial Services Research, Springer, vol. 25(2), pages 291-325, April.
    3. Stuart A. Gabriel & Stuart S. Rosenthal, 2006. "Secondary Mortgage Markets and Access to Credit: 1992-2002," Working Paper 8569, USC Lusk Center for Real Estate.
    4. Raphael W. Bostic & Brian J. Surette, 2004. "Market Forces or CRA-induced Externalities: What Accounts for the Increase in Mortgage Lending to Lower-Income Communities?," Working Paper 8592, USC Lusk Center for Real Estate.
    5. Raphael Bostic & Hamid Mehran & Anna Paulson & Marc Saidenberg, 2002. "Regulatory incentives and consolidation: the case of commercial bank mergers and the Community Reinvestment Act," Working Paper Series WP-02-06, Federal Reserve Bank of Chicago.
    6. Raphael Bostic & Brian J. Surette, 2000. "Have the doors opened wider? trends in homeownership rates by race and income," Finance and Economics Discussion Series 2000-31, Board of Governors of the Federal Reserve System (U.S.).
    7. Bostic, Raphael W. & Robinson, Breck L., 2004. "The impact of CRA agreements on community banks," Journal of Banking & Finance, Elsevier, vol. 28(12), pages 3069-3095, December.
    8. Raphael Bostic, 2002. "Do CRA Agreements Influence Lending Patterns?," Working Paper 8623, USC Lusk Center for Real Estate.
    9. Elizabeth Laderman & Carolina Reid, 2008. "Lending in low- and moderate-income neighborhoods in California: the performance of CRA lending during the subprime meltdown," Community Development Investment Center Working Paper 2008-05, Federal Reserve Bank of San Francisco.
    10. AKM Rezaul Hossain, 2004. "The Past, Present and Future of Community Reinvestment Act (CRA): A Historical Perspective," Working papers 2004-30, University of Connecticut, Department of Economics.
    11. Kenneth Temkin & Roberto Quercia & George Galster, 2000. "The impact of secondary mortgage market guidelines on affordable and fair lending: A reconnaissance from the front lines," The Review of Black Political Economy, Springer, vol. 28(2), pages 29-52, December.


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