Key facts
- NAAHL urged federal regulators to reconsider proposed changes to the Community Reinvestment Act (CRA).
- The group warned that higher asset thresholds and other revisions could reduce financing for affordable housing and community development.
- NAAHL specifically opposed changes to bank asset thresholds and restrictions on grants to nonprofit organizations.
- Under a modeled scenario, 3,673 banks would fall into the small-bank category (less than $10 billion in assets) and not be subject to a community development test.
- More than 31 million people would newly live in census tracts with limited community development coverage under the modeled scenario.
- NAAHL said CRA-motivated investors provided about 80% of the equity for Low-Income Housing Tax Credit projects in 2024.
The National Association of Affordable Housing Lenders (NAAHL) is urging federal banking regulators to reconsider proposed changes to the Community Reinvestment Act (CRA). In comments filed Tuesday with the Office of the Comptroller of the Currency (OCC) and the Federal Deposit Insurance Corp. (FDIC), NAAHL warned that revisions to asset thresholds and other aspects of the rule could reduce financing for affordable housing and community development, particularly in rural areas and smaller markets.
NAAHL stated that sweeping changes to CRA could jeopardize partnerships that drive housing, small business, and community development ecosystems, putting capital for housing supply and local economies at risk. The organization specifically opposed changes to bank asset thresholds that determine how institutions are evaluated under CRA, as well as proposed restrictions on grants to nonprofit organizations and changes to how regulators evaluate community development lending and investments.
NAAHL's analysis, developed with FairPlay AI, examined how proposed changes to asset thresholds could affect banks' community development responsibilities. Under the agencies' proposal, the threshold for small banks would rise from $412 million to $1 billion in assets, and for large banks from $1.649 billion to $10 billion. NAAHL also modeled a scenario where small banks have less than $10 billion in assets and large banks have at least $30 billion. Under this alternative, 3,673 banks would fall into the small-bank category and not be subject to a community development test, compared to 2,288 under current thresholds. This could result in over 31 million people living in census tracts with limited community development coverage.
The group warned that reducing the number of banks subject to community development evaluations could weaken financing for affordable housing, noting that CRA-motivated investors provided about 80% of the equity for Low-Income Housing Tax Credit projects in 2024. Banks with less than $30 billion in assets made nearly $53.5 billion in community development loans in 2024, accounting for more than one-third of community development lending by dollar volume.
While supporting changes that improve clarity and predictability, NAAHL opposed proposed changes to grant eligibility and documentation requirements, arguing they could discourage banks from supporting nonprofit and community-based organizations. The group cited that banks provide more than $617 million in CRA-qualified grants annually.
Separately, NAAHL joined over 475 organizations in urging the OCC and FDIC to maintain meaningful community development incentives. This coalition noted that CRA incentivized more than $430 billion in loans and investments in low- and moderate-income communities in 2024, warning that a decline could hurt local economies and worsen the affordable housing shortage.