The federal banking regulators responsible for overseeing the Community Reinvestment Act (CRA) obligations of lenders they regulate have released the 2022 list of distressed or underserved rural census tracts where community-development loans, investments and services are eligible for special CRA consideration.
Community-development efforts eligible for the special consideration include affordable-housing lending in these lower-income rural census tracts. The CRA was enacted in 1977 to encourage financial institutions to meet the credit needs of the local communities they serve — with a focus on addressing the community development in low- and moderate-income individuals.
CRA regulations define lending and other activities focused on affordable housing for low- and moderate-income individuals as a form of community development, according to the Federal Reserve Bank of Minneapolis. Bank-information services provider Sheshunoff Consulting and Solutions adds that under the CRA “affordable-housing activities must benefit or be likely to benefit LMI [low- and moderate-income]” individuals.
An analysis of the census tracts identified by federal banking regulators for 2022 as “Distressed or Underserved Nonmetropolitan Middle-Income Geographies,” reveals the following:
States with the largest number of underserved or distressed census tracts: Georgia, 147; North Carolina, 145; Texas, 144; Kentucky, 130; Michigan, 117; and Mississippi, 101.
States with the lowest number of identified underserved or distressed census tracts: Hawaii, 1; Nevada, 2; Indiana, 4; Massachusetts, 5; Maryland, 7; New York, 7. (The nation’s most populous state, California, had 28 rural census tracts identified as underserved or distressed, according to the 2022 list released by regulators.)
Finally, the following states do not appear on the list: Delaware, Connecticut, New Hampshire, New Jersey and Rhode Island.
The federal banking regulators responsible for enforcing CRA are the Federal Deposit Insurance Corp., or FDIC; the Federal Reserve Board; and the Office of the Comptroller of the Currency.
“Revitalization or stabilization activities in these geographies [census tracts] are eligible to receive CRA consideration under the community development definition,” states the Office of the Comptroller of the Currency’s announcement revealing the list of eligible census tracts nationwide.
A nonmetropolitan middle-income geography — a low-to-moderate income rural area — can be defined as distressed if it is a census tract that meets one or more “trigger” factors, according to the Federal Financial Institutions Examination Council.
The triggers:
- An unemployment rate of at least 1.5 times the national average.
- A poverty rate of 20 percent or more.
- A population loss of 10 percent or more between the previous and most recent census or a net population migration loss of 5% or more over the five-year period prior to the most recent census.
