First Mid Bancshares recently announced they would be acquiring the St. Louis-based Jefferson Bank in a merger. Since the announcement, First Mid, which is based in Mattoon, Illinois, has been under fire from a number of consumer advocacy groups for not lending to majority-Black neighborhoods.
In an interview with St. Louis on the Air, Elisabeth Risch, the assistant director of the Metropolitan St. Louis Equal Housing and Opportunity Council, said, “Their data was just so staggeringly bad that there was no way we could support this merger… The statistic that really stuck out to us is that over the last few years… in 2020 specifically, they had about 778 mortgage applications all across the region, and only 14 of those came from African American borrowers.” The Equal Housing Alliance further claims that Black borrowers only got 1.2% of mortgages made in the St. Louis area by First Mid, which is significantly below the 6.8% average at peer banks.
Given these statistics and Jefferson Bank’s history of job discrimination against African Americans in 1963, these advocacy groups have urged the Chicago Federal Reserve Bank to block the merger due to concerns of alleged redlining. If First Mid is allowed to acquire Jefferson Bank, the newly combined bank would be the 11th largest in deposits in the St. Louis market, which is another reason why advocacy groups are opposing the merger.
First Mid is one of many banks that are being scrutinized for insufficient lending in low and moderate-income (LMI) and Black-majority neighborhoods. HomeTraq wants to ensure your financial institution isn’t next.
The Community Reinvestment Act (CRA) is a federal law that was first passed in 1977 with the intention to ensure that banks did not discriminate against individuals or businesses within their communities. The Federal Reserve System (FRS), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) all evaluate how banks are fulfilling the CRA. This act has been on the minds of many financial institution executives since a final rule was issued by the OCC in May 2020. This final rule “strengthens and modernizes” the CRA by creating stricter regulations around LMI lending, specifically for banks.
So how can you ensure you receive credit under the CRA, avoid regulatory scrutiny from the Consumer Financial Protection Bureau (CFPB), and prevent backlash from consumer advocacy groups?
The answer is promoting socially-responsible real estate & lending practices. HomeTraq can help you achieve this with low-to-moderate income lending and down payment assistance programs while also solving the widespread mortgage issue of your lost customer problem. By distributing HomeTraq to your consumers, you can also promote your institution’s dedication to equality and inclusivity.
Step 1: Sign up with HomeTraq.
Step 2: We upload your LMI, DPA, and/or fair lending program parameters. .
Step 3: Distribute HomeTraq as a socially responsible way to buy a home.
Step 4: Show everyone how your financial institution is taking LMI lending seriously!
At its core, HomeTraq gives homebuyers equal access to real estate agents and allows an equal opportunity to schedule a home tour. When a buyer schedules a home tour, the agent is not exposed to the buyer’s age, race, gender, or ethnic background. Therefore, minority homebuyers can schedule a tour without fear of discrimination before they meet the agent. In addition, advertising platforms such as Google, Instagram & Facebook enable HomeTraq and local banks to specifically promote on-demand real estate services in underserved markets. Your bank can receive CRA credit by simply promoting home showing services to current and potential customers in these underserved areas. Furthermore, by using FFIEC census tract information, HomeTraq can display your specific DPA programs to potential homebuyers who apply for a loan for homes that are located in an LMI or “majority-minority” area.
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