Journal of Real Estate Finance and Economics, 23:3, 435±440, 2001
# 2001 Kluwer Academic Publishers. Manufactured in The Netherlands.
Comment: Credit Market Access and the
Effects of CRA
AMY S. BOGDON
Fannie Mae Foundation, 4000 Wisconsin Avenue, NW, Washington, DC 20016-2804
In the past decade, important changes have taken place in the housing and mortgage
markets and in the regulation and enforcement of laws intended to improve access to
credit. Among these changes are the availability of Home Mortgage Disclosure Act
(HMDA) data with details on individual loan characteristics, a marked expansion in the
number of Community Reinvestment Act (CRA) agreements, and homeownership
outreach initiatives by the government-sponsored enterprises and primary lenders. It is not
yet clear to what extent these efforts have improved access to mortgage credit.
The evidence on mortgage-market outcomes is mixed. Between 1993 and 1997,
mortgage lending to minority households increased 53 percent, compared to just 20
percent for all households. However, HMDA data show that black and Hispanic applicants
are still far more likely than whites to be denied mortgage loans, and the gap between
minority and white homeownership rates is closing slowly. In 1998, the homeownership
rate was nearly 73 percent for whites, compared with 44 percent to 46 percent for black
and Hispanic households.
The source of improvements in mortgage-market outcomes has been the subject of
much debate. A recent article by Schwartz (1998) ®nds that banks with CRA agreements
tend to be more responsive than other lenders to the credit needs of low-income and
minority households and areas. Others counter that the costs of CRA outweigh its bene®ts.
The two articles in this session try to explain the reduced disparity in minority and white
loan denial rates and homeownership rates. In ``Disparities in Mortgage Lending, Bank
Performance, Economic In¯uence, and Regulatory Oversight,'' Harvey, Collins, Nigro,
and Robinson seek to understand the source of changes in racial disparities in mortgage
loan denial rates. Based on HMDA data and bank characteristics, their results suggest that
changes in the quality of applicant pools, in economic conditions, and in the ®nancial
condition and performance of lending institutions were more important than regulatory
in¯uences in reducing disparities in loan denial rates.
Harvey et al. emphasize differential loan denial rates. As with much of the work using