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Classmates in Library

Greater Dallas Community Development Corporation CDC

What Is the Community Reinvestment Act (CRA)? 

The Community Reinvestment Act (CRA) is a federal law enacted in 1977 to encourage depository institutions to meet the credit needs of the communities where they are chartered, including low- and moderate-income neighborhoods.

The CRA requires federal banking agencies to assess how well each institution fulfills its obligations to these communities. The agencies must consider these performance ratings when evaluating applications for future approval of bank mergers, charters, acquisitions, branch openings, and deposit facilities.



  • The Community Reinvestment Act (CRA) helps ensure that federally insured banks meet the credit needs of the communities in which they are located, consistent with safe and sound banking practices.

  • The CRA was one of several laws passed during the late 1960s and 1970s to expand access to credit.

  • Though regulators look at the lending activity and other data in their evaluation, there are no specific benchmarks banks have to meet.

  • CRA performance ratings are available online and upon request at local bank branches.

Understanding the Community Reinvestment Act (CRA)

Before the Community Reinvestment Act (and other fair housing laws), U.S. banks systematically denied mortgages to Black Americans and other people of color who lived in certain areas "redlined" by a federal government agency called the Home Owners' Loan Corporation (HOLC). The HOLC created maps that classified neighborhoods across the country on a "perceived level of lending risk" based on information gathered from various sources, including local appraisers, loan officers, city officials, and real estate agents.

The neighborhoods were color-coded on maps, with each color representing the area's perceived risk to lenders. HOLC deemed the red communities hazardous, describing them as "characterized by detrimental influences in a pronounced degree, undesirable population, or an infiltration of it.


" Neighborhoods with predominantly racial and ethnic minority populations were colored red—hence, "redlined."

The maps were a tool for widespread racial discrimination. The immediate effect of redlining was that residents in these areas couldn't access credit to buy or improve housing. However, the long-term effects of redlining persist:

  • 74% of neighborhoods that HOLC colored red ("hazardous") more than 80 years ago are low- to moderate-income neighborhoods today.

  • 64% of the "hazardous" neighborhoods remain racial and ethnic minority neighborhoods today.

  • 91% of areas colored green ("best") in the 1930s remain middle- to upper-income areas today, and 85% are still predominantly White.

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