Which of the following best describes the primary purpose of the Community Reinvestment Act (CRA)?
Correct Answer
C) To encourage depository institutions to meet the credit needs of all segments of their communities, including low- and moderate-income neighborhoods, consistent with safe and sound lending
The CRA, enacted in 1977 (12 U.S.C. §2901), was designed to encourage federally insured depository institutions to help meet the credit needs of the communities in which they operate, including low- and moderate-income neighborhoods, while maintaining safe and sound lending practices. Regulatory agencies evaluate CRA performance during examinations and consider it when reviewing applications for mergers, acquisitions, and branch openings.
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Related Topics & Key Terms
Key Terms:
Related Concepts
Foreclosure is the legal process by which a lender takes possession of a property when a borrower fails to make mortgage payments. It allows the lender to sell the property to recover the outstanding debt.
The loan-to-value ratio (LTV) is the percentage of a property's appraised value or purchase price (whichever is lower) that is being financed through a mortgage. LTV = Loan Amount / Property Value.
A comparison of the major mortgage loan types—conventional, FHA, VA, and USDA—covering their eligibility requirements, down payment amounts, mortgage insurance rules, and best use cases.
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