In December, Woodstock Institute and Housing Action Illinois hosted the first Illinois Community Reinvestment Act (IL-CRA) Roundtable in Fairview Heights, part of the Metro East St. Louis area. The event brought together stakeholders from across the Central and Southern regions of Illinois to learn how the law works to proactively address decades of disinvestment in lower-income communities. Attendees included community-based organizations, community organizers, IL-CRA covered lenders, financial institution trade associations, and regulators.
We were also honored that State Senator Christopher Belt of the 57th Senate District, the lead Senate sponsor of the original IL-CRA bill in 2021, joined us to share his support for the law. Senator Belt has continued championing this issue by shepherding the passage of another bill authorizing a study to identify communities in Illinois experiencing disparities in access to financial services, the results of which will provide valuable guidance for implementing the IL-CRA.
Next up we’ll be repeating this Roundtable event for the Central Illinois and Chicagoland regions in early 2025. Stay tuned for more details!
Why a state CRA? How does it work?
The federal Community Reinvestment Act (CRA) became law in 1977 following a national grassroots movement against “redlining,” or the practice of systematically denying credit to nonwhite and/or lower-income communities. Federal regulators evaluate CRA-covered banks based on their provision of safe and accessible financial products and services to the communities they serve, including lower-income (LMI) communities.
Woodstock Institute’s research, as well as several similar reports, demonstrate that the mortgage market has shifted significantly away from banks over the last few decades. Today, the majority of mortgage originations come from non-banks, which are not subject to the federal CRA, and this shift is even more pronounced among communities of color and LMI borrowers.
In 2021, Illinois became the second state to enact a state CRA covering all three types of mortgage lenders regulated at the state level – state-chartered banks, state-chartered credit unions, and mortgage companies. Spearheaded by the Illinois Legislative Black Caucus, this state law was in part a reaction to ongoing racial disparities in mortgage lending.
Like the federal Community Reinvestment Act, lenders covered by the IL-CRA undergo exams based on how well they are meeting the financial service needs of low-to-moderate income (LMI) communities. Lenders receive “CRA credit” for a broad array of activities that serve the community development needs of LMI areas, such as financing housing developments using Low Income Housing Tax Credits (LIHTC) and participating in Special Purpose Credit Programs that extend mortgage and small business credit to individuals and communities who typically struggle to access it.
Illinois CRA Roundtable – Metro East
The Roundtable began with opening remarks by Senator Belt; then Jane Doyle, Woodstock Institute’s Senior Regulatory Policy Associate, and James Miller, Housing Action Illinois’s Capacity Building Associate, gave a presentation on the IL-CRA and the unique roles various stakeholders can play in making the law effective.
Lenders covered by the IL-CRA received an overview of the nuts and bolts of the IL-CRA exam process, including who is covered by the law, what activities count for CRA credit, and the different components of the CRA exam.
The IL-CRA also provides a valuable tool for advocates to push for increased investment in their communities. Presenters covered how community organizations and organizers can engage with the process by identifying the specific financial service needs of their communities and working with lenders to ensure those needs are addressed.
We capped the morning off with a networking hour for community-based organizations and covered lenders to connect with one another and form partnerships and funding relationships that can be considered for IL-CRA exam credit.
Check out the presentation materials and some photo highlights from the event below!
