OCC and FDIC proposal would curb mid-size bank Housing Credit investment

A proposal from the OCC and FDIC would remove an important CRA incentive for mid-size banks that invest in Low-Income Housing Tax Credits, Commercial Observer reported Oct. 19. The Community Reinvestment Act encourages banks to meet the credit needs of the communities they serve, including low- and moderate-income neighborhoods. The proposal covers banks with roughly $1.65 billion to $10 billion in assets.

Banks supply an estimated 75 to 80 percent of Housing Credit equity nationwide, and at least 71 percent of that investment is motivated, in part, by CRA considerations, according to the report.

The Housing Credit is the nation's largest source of financing for affordable rental housing. In New York, it supported about 1,504 projects and nearly 160,000 housing units between 2010 and 2020, about 80 percent of them affordable to low-income households.

A February 2024 state comptroller report, New Yorkers in Need: The Housing Insecurity Crisis, found about 2.9 million New York households spend at least 30 percent of income on housing, and roughly one in five spends more than half.

Prior coverage noted the comment period on the CRA rewrite was set to close Tuesday, with the National Community Reinvestment Coalition estimating $87 billion a year in community development at risk.