Introduced on October 28, 2013 by Council member Jack Evans, the Community Development Amendment Act of 2013 seeks to 1) amend the Community Development Act of 2000 (Title IV of the 21st Century Financial Modernization Act of 2000), which established that financial institutions have an obligation to meet the credit needs of local communities, and 2) include elements of the National Community Reinvestment Coalition‘s model on Responsible Banking Ordinance. The Responsible Banking Ordinance links the eligibility to hold city funds with incentivizing a higher amount and quality of services provided by financial institutions to historically underserved communities.
Large disparities in prime home lending among minority groups as well as low-and-moderate-income (LMI) borrowers in the District has led to the introduction of this Act. Data collected from the 2011 Home Mortgage Disclosure Act shows that 56% of the District’s households are African American, but all the financial institutions together have made loans to a total of 18.5 % of their African American Borrowers. It doesn’t stop there. In the District, low-and moderate-income (LMI) households encompassed 40.9% of the city’s households, but lenders made only 22.9% of their loans to LMI borrowers. The denial rates that minority and LMI borrowers faced were nearly double that of their white and upper-to-middle class counterparts.
Changes the Community Development Amendment Act Seeks to Make
- Expand the definition of “Financial Institution”.
- Add priority populations to the focus on designated development areas: Monority Residents, Low-income and moderate income resident
- Change the frequency of submission of the community development plan required from financial institutions from annually to every two years
- Add a public comment requirement to the community development plan
- Add to the Commissioner’s report on financial institutions: That it will be considered by the City Treasurer when awarding deposits and other contracts to financial institutions, That the report shall address the reciept of municipal deposits
- Add to Commission’s determination of compliance: Plan to make community development loans and investments as defined by Community Reinvestment Act regulations, Plans to engage in foreclosure prevention and mitigation activities including loan modificationand reclaiming real estate owned (REO) properties for use as affordable housing ,Plans to make small business loans, including loans to minority-owner and women-owned small business, Plans to locate retail loan officer and community development loan officers in DC and making them easy to contact
- Add as an element of compliance monitoring an annual report from the City Treasurer to the Mayor and Council on which financial institutions received municipal deposits and other contracts, and which factors were used in making those decisions