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CRA and fair lending regulations: resulting trends in mortgage lending

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Author Info

  • Douglas D. Evanoff
  • Lewis M. Segal

Abstract

This article provides background on the evolution of Community Reinvestment Act (CRA) and fair lending regulations, summarizes the relevant economic literature, and evaluates the effectiveness of the regulations by analyzing recent trends in mortgage lending activity. Are the trends in line with the intent of the regulations? Can the trends by attributed to the regulations?

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File URL: http://www.chicagofed.org/digital_assets/publications/economic_perspectives/1996/epnd96b.pdf
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Bibliographic Info

Article provided by Federal Reserve Bank of Chicago in its journal Economic Perspectives.

Volume (Year): (1996)
Issue (Month): Nov ()
Pages: 19-46

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Handle: RePEc:fip:fedhep:y:1996:i:nov:p:19-46:n:v.20no.6

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Related research

Keywords: Community Reinvestment Act of 1977 ; Mortgages ; Discrimination in mortgage loans;

References

References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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  1. Calomiris, Charles W & Kahn, Charles M & Longhofer, Stanley D, 1994. "Housing-Finance Intervention and Private Incentives: Helping Minorities and the Poor," Journal of Money, Credit and Banking, Blackwell Publishing, vol. 26(3), pages 634-74, August.
  2. Becker, Gary S., 1971. "The Economics of Discrimination," University of Chicago Press Economics Books, University of Chicago Press, edition 1, number 9780226041162, August.
  3. Glenn B. Canner & Wayne Passmore, 1994. "Residential lending to low-income and minority families: evidence from the 1992 HMDA data," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Feb, pages 79-108.
  4. Bates, Timothy M & Bradford, William D, 1980. " An Analysis of the Portfolio Behavior of Black-Owned Commercial Banks," Journal of Finance, American Finance Association, vol. 35(3), pages 753-68, June.
  5. Brimmer, Andrew F, 1971. "The Black Banks: An Assessment of Performance and Prospects," Journal of Finance, American Finance Association, vol. 26(2), pages 379-405, May.
  6. Michael H. Schill & Susan M. Wachter, . "A Tale of Two Cities: Racial and Ethnic Geographic Disparities in Home Mortgage Lending in Boston and Philadelphia," Rodney L. White Center for Financial Research Working Papers 16-93, Wharton School Rodney L. White Center for Financial Research.
  7. Alicia H. Munnell, 1992. "Mortgage lending in Boston: interpreting HMDA data," Working Papers 92-7, Federal Reserve Bank of Boston.
  8. Lynn Elaine Browne & Geoffrey M.B. Tootell, 1995. "Mortgage lending in Boston: a response to the critics," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 53-78.
  9. HAROLD Black & M. Collins & Ken Cyree, 1997. "Do Black-Owned Banks Discriminate against Black Borrowers?," Journal of Financial Services Research, Springer, vol. 11(1), pages 189-204, February.
  10. Kwast, Myron L. & Black, Harold, 1983. "An analysis of the behavior of mature black-owned commercial banks," Journal of Economics and Business, Elsevier, vol. 35(1), pages 41-54.
  11. Dahl, Drew, 1996. "Ownership changes and lending at minority banks: A note," Journal of Banking & Finance, Elsevier, vol. 20(7), pages 1289-1301, August.
  12. Black, Harold & Schweitzer, Robert L & Mandell, Lewis, 1978. "Discrimination in Mortgage Lending," American Economic Review, American Economic Association, vol. 68(2), pages 186-91, May.
  13. Paul W. Bauer & Brian A. Cromwell, 1994. "A Monte Carlo examination of bias tests in mortgage lending," Economic Review, Federal Reserve Bank of Cleveland, issue Q III, pages 27-40.
  14. Holmes, Andrew & Horvitz, Paul, 1994. " Mortgage Redlining: Race, Risk, and Demand," Journal of Finance, American Finance Association, vol. 49(1), pages 81-99, March.
  15. Douglas Evanoff & Lewis Segal, 1997. "Strategic Responses to Bank Regulation: Evidence From HMDA Data," Journal of Financial Services Research, Springer, vol. 11(1), pages 69-93, February.
  16. Eric Rosenblatt, 1997. "A Reconsideration Of Discrimination In Mortgage Underwriting With Data From A National Mortgage Bank," Journal of Financial Services Research, Springer, vol. 11(1), pages 109-131, February.
  17. Glenn B. Canner, 1982. "Redlining : research and federal legislative response," Staff Studies 121, Board of Governors of the Federal Reserve System (U.S.).
  18. Yezer, Anthony M J & Phillips, Robert F & Trost, Robert P, 1994. "Bias in Estimates of Discrimination and Default in Mortgage Lending: The Effects of Simultaneity and Self-Selection," The Journal of Real Estate Finance and Economics, Springer, vol. 9(3), pages 197-215, November.
  19. Lawrence J. White, 1993. "The Community Reinvestment Act: Good Intentions Headed in the Wrong Direction," Working Papers 93-01, New York University, Leonard N. Stern School of Business, Department of Economics.
  20. Benjamin C. Esty, 1995. "South Shore Bank: is it the model of success for community development banks?," Proceedings 455, Federal Reserve Bank of Chicago.
  21. Griffith L. Garwood & Dolores S. Smith, 1993. "The Community Reinvestment Act: evolution and current issues," Federal Reserve Bulletin, Board of Governors of the Federal Reserve System (U.S.), issue Apr, pages 251-267.
  22. James A. Berkovec & Glenn B. Canner & Stuart A. Gabriel & Timothy H. Hannan, 1995. "Mortgage discrimination and FHA loan performance," Proceedings 456, Federal Reserve Bank of Chicago.
  23. Roger S. Ahlbrandt, 1977. "Exploratory Research on the Redlining Phenomenon," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 5(4), pages 473-481.
  24. Peter M. Hutchinson & James R. Ostas & J. David Reed, 1977. "A Survey and Comparison of Redlining Influences In Urban Mortgage Lending Markets," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 5(4), pages 463-472.
  25. Hunter, William C & Walker, Mary Beth, 1996. "The Cultural Affinity Hypothesis and Mortgage Lending Decisions," The Journal of Real Estate Finance and Economics, Springer, vol. 13(1), pages 57-70, July.
  26. William C. Hunter & Mary Beth Walker, 1995. "The cultural affinity hypothesis and mortgage lending decisions," Working Paper Series, Issues in Financial Regulation 95-8, Federal Reserve Bank of Chicago.
  27. Robert Avery & Patricia Beeson & Paul Calem, 1997. "Using HMDA Data as a Regulatory Screen for Fair Lending Compliance," Journal of Financial Services Research, Springer, vol. 11(1), pages 9-42, February.
  28. Geoffrey M.B. Tootell, 1993. "Defaults, denials, and discrimination in mortgage lending," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 45-51.
  29. Robert T. Clair, 1988. "The performance of black-owned banks in their primary market areas," Economic and Financial Policy Review, Federal Reserve Bank of Dallas, issue Nov, pages 11-20.
  30. Jeffrey M. Lacker, 1995. "Neighborhoods and banking," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 13-38.
  31. Christopher P. Beshouri & Dennis C. Glennon, 1996. "CRA as "market development" or "tax": an analysis of lending decisions and economic development," Proceedings 523, Federal Reserve Bank of Chicago.
  32. Katharine L. Bradbury & Karl E. Case & Constance R. Dunham, 1989. "Geographic patterns of mortgage lending in Boston, 1982-1987," New England Economic Review, Federal Reserve Bank of Boston, issue Sep, pages 3-30.
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Citations

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Cited by:
  1. 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.
  2. 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.
  3. Song Han, 2002. "On the economics of discrimination in credit markets," Finance and Economics Discussion Series 2002-2, Board of Governors of the Federal Reserve System (U.S.).
  4. Nothaft, Frank E. & Perry, Vanessa G., 2002. "Do mortgage rates vary by neighborhood? Implications for loan pricing and redlining," Journal of Housing Economics, Elsevier, vol. 11(3), pages 244-265, September.
  5. Lewis M. Segal & Daniel G. Sullivan, 1998. "Trends in homeownership: race, demographics, and income," Economic Perspectives, Federal Reserve Bank of Chicago, issue Q II, pages 53-72.
  6. Drew Dahl & Douglas Evanoff & Michael Spivey, 2003. "The Timing and Persistence of CRA Compliance Ratings," Journal of Financial Services Research, Springer, vol. 23(2), pages 113-132, April.
  7. 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.
  8. Robert L. Lacy & John R. Walter, 2002. "What can price theory say about the Community Reinvestment Act?," Economic Quarterly, Federal Reserve Bank of Richmond, issue Spr, pages 1-27.
  9. Glenn B. Canner & Elizabeth Laderman & Andreas Lehnert & Wayne Passmore, 2002. "Does the Community Reinvestment Act (CRA) cause banks to provide a subsidy to some mortgage borrowers?," Finance and Economics Discussion Series 2002-19, Board of Governors of the Federal Reserve System (U.S.).
  10. 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.
  11. Neil Bhutta, 2008. "Giving credit where credit is due? the Community Reinvestment Act and mortgage lending in lower-income neighborhoods," Finance and Economics Discussion Series 2008-61, Board of Governors of the Federal Reserve System (U.S.).
  12. Gregory Squires & Sally O'Connor, 2001. "Access to capital: Milwaukee's continuing small business lending gaps," The Review of Black Political Economy, Springer, vol. 29(2), pages 9-46, December.
  13. Black, Harold A. & Robinson, Breck L. & Schweitzer, Robert L., 2001. "Comparing lending decisions of minority-owned and White-owned banks: Is there discrimination in mortgage lending?," Review of Financial Economics, Elsevier, vol. 10(1), pages 23-39.
  14. Raphael Bostic, 2002. "Do CRA Agreements Influence Lending Patterns?," Working Paper 8623, USC Lusk Center for Real Estate.

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