Evidence is building that loans meant for poor residents are actually going to the affluent buyers pushing them out.
The five blocks of 11th Street NW between Harvard Street and Park Road in Washington, D.C., have changed a lot in the past few years. Like other parts of the Columbia Heights neighborhood, what was once a lower-income African American and Hispanic area is now dotted with hipster bars and restaurants popular with new 20- and 30-something residents.
The way it works comes down to ratings. The federal regulators who oversee the CRA — the Federal Deposit Insurance Corporation, the Office of the Comptroller of the Currency and the Federal Reserve Board — look at how much banks are lending to low-income borrowers and to those in low-income census tracts . The regulators assign a rating to each bank and take this rating into consideration when deciding on banks’ applications to expand or merge.
And in Washington, D.C., most CRA lending appears to be going not to the underserved but to the people gentrifying their neighborhoods. Of theof CRA-eligible mortgage loans made in Washington in 2017, 65.5 percent went to borrowers whose incomes exceed 80 percent of the local median. Yet these mortgages earn banks CRA points because the borrowers reside in one of D.C.’s 88 eligible census tracts.where the median family income is only around 50 percent of the D.C. median .
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