November 2, 2023

CFPB: New Report Issued on State Community Reinvestment Laws

State Community Reinvestment Acts demonstrate how states promote reinvestment activities for banks, credit unions and mortgage companies

Today, the Consumer Financial Protection Bureau (CFPB) published a new analysis on state Community Reinvestment Act laws, highlighting how states ensure financial institutions’ lending, services, and investment activities meet the credit needs of their communities. The report examined the laws of seven states (Connecticut, Illinois, Massachusetts, New York, Rhode Island, Washington, West Virginia) and the District of Columbia, and found that many of those states adopted laws similar to the federal Community Reinvestment Act in decades following the 1977 passage of the landmark federal anti-redlining law.

“The financial market has changed considerably since the passage of the Community Reinvestment Act, and nonbanks are now capturing a large share of the mortgage market,” said CFPB Director Rohit Chopra. “States have responded by creating reinvestment obligations for mortgage companies and have tailored state reinvestment requirements to meet the needs of their local communities.”

While the federal Community Reinvestment Act law applies strictly to banks, state reinvestment laws can apply to a wide range of financial institutions, including nonbank mortgage companies. Banks now originate and hold a much smaller share of outstanding mortgage debt than they did when the legislation was originally enacted. In 1977, banks held 74% of outstanding mortgage debt. By 2007, this share had declined to just 28%. As of 2021, nonbank mortgage companies originated 64% of conventional home purchase mortgage loans, compared to the 25% originated by banks.

Key findings of today’s report are:

When implementing their state community reinvestment laws, states also use information from federal regulators, such as mortgage, small business, and small farm data, or consider violations of federal laws in their review of a financial institution’s reinvestment performance.

Read the report, State Community Reinvestment Acts: Summary of State Laws.

Consumers can submit complaints about financial products or services by visiting the CFPB’s website or by calling (855) 411-CFPB (2372).

Employees who believe their companies have violated federal consumer financial protection laws are encouraged to send information about what they know to

This post was originally published here.