If finalized – and that’s a big if – proposed changes to bank rules under the Community Reinvestment Act (CRA) are likely to have significant mortgage-finance implications. Banks have long persuaded regulators that they met their CRA obligations due in large part to extensive mortgage-securitization and MBS-purchase activities in which Ginnie and the GSEs – not the banks – ultimately took the risk. The proposal does not wholly shut this down, as initially contemplated, but it nonetheless would end much CRA credit for mortgage originations then sold into the secondary market, while narrowing CRA credit for MBS to those related to LMI borrowers, not CRA assessment areas.
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