In The News

Program Enables Banks To Gain Community Reinvestment Act Credits

CBC Mortgage Agency (CBCMA), a nationally chartered housing finance agency and a source of down payment assistance for first-time homebuyers, announced that, so far this year, $14 million in affordable home loans have been purchased through the company’s CRA Note Exchange (the Exchange). The online platform enables affordable housing organizations to sell their mortgages to banks to aid them in fulfilling their obligations under the federal Community Reinvestment Act.

The CRA Note Exchange was launched in 2018 as a platform for CBCMA to sell its second lien down payment assistance mortgages, enabling the company to provide reduced-cost home financing for lower-income families. Accessible through an online portal, the Exchange also enables non-profit homebuilders, affordable housing organizations, and state housing finance agencies to sell CRA-eligible mortgage loans to free up capital for future low or moderate income residential construction projects or loan originations. Banks are able to review, select and purchase loans in specific areas that support their CRA lending objectives. In addition to providing an opportunity for banks to obtain CRA credits, the Exchange makes secondary market sales more efficient.

Enacted in 1977, the CRA requires the Federal Reserve and other federal banking regulators to encourage financial institutions to help meet the credit needs of all communities where they do business, including low- and moderate-income neighborhoods.

“As a virtual marketplace for CRA-eligible notes, our CRA Note Exchange is an important tool for creating liquidity that enables us to continue to fund our down payment assistance programs,” said CBC Mortgage Agency President Richard Ferguson. “Because most families who utilize our down payment assistance programs are minorities, people of color are the primary beneficiaries of the Exchange.”

Since CRA Note Exchange debuted, banks and other investors have acquired $40 million in first and second mortgage loans, providing many of these lenders with much needed CRA credits.

Banks and investor partners that are seeking CRA credits can also issue a line of credit to CBCMA that is later secured by first and second mortgage originations.