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    The Community Reinvestment Act or CRA is a federal regulation that was enacted in 1977.  It is designed to encourage insured financial institutions to help meet the credit needs of all segments of the communities where they operate. The regulation arose out of discriminatory redlining practices conducted by some lenders against low-income borrowers or low-income neighborhoods.

    The CRA requires banks to demonstrate sustained performance in meeting the needs of their communities.  Dependent on the bank’s size, banks are evaluated in three primary areas.  All banks are reviewed on their lending activity including mortgage, small business and community development loans.  Banks over a certain asset size, also must show how they are meeting their communities’ needs through qualified investments and community development services.

    Every insured financial institution is examined periodically by their federal regulator to measure their performance with the requirements of the CRA.  After the completion of this examination, the regulator issues a CRA Rating and a CRA Public Evaluation.  This rating can range between Outstanding, Satisfactory, Needs to Improve or Substantial Noncompliance.  It serves as a measure of how well the institution is meeting its communities’ needs.

    To learn more about the CRA, conduct a search or review the regulation itself, visit our CRA Knowledge Base.

    To keep up-to-date with changes in the CRA industry, visit our CRA Newswire.

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