Yesterday, two of the nation’s three federal banking regulators proposed the most significant rewrite of anti-redlining rules in nearly three decades, a move that housing advocates immediately condemned as a threat to affordable housing finance. The Office of the Comptroller of the Currency and the Federal Deposit Insurance Corporation announced targeted changes to their Community Reinvestment Act rules on Friday, July 31, 2026, while the Federal Reserve, the third regulator with CRA oversight, was not part of the proposed rule.
The proposal aims to better align with the statutory mandate, ensure that community development grants reach the communities they are intended to benefit, reduce burden for banks—particularly community banks—and provide greater clarity for how to obtain CRA consideration. But consumer protection groups, affordable housing lenders, and community development organizations say the plan would dramatically weaken accountability for lending in low- and moderate-income neighborhoods and could divert hundreds of billions of dollars away from the communities that need it most.
The Community Reinvestment Act, passed in 1977 to combat redlining and discriminatory lending practices, has become one of the most powerful—yet least understood—drivers of private investment in affordable housing and community development. The timing of this proposal is particularly striking: it comes just days after a major industry report found that in 2024, CRA helped incentivize $430 billion in private investment—nearly six times the combined federal funding from HUD, the U.S. Department of Agriculture’s Rural Housing Service, the Small Business Administration and the Community Development Financial Institutions Fund.
The proposal
What the FDIC and OCC want to change
The plan would reshape how banks are evaluated for meeting their community lending obligations.
Under the rulemaking, banks with $10 billion or less in assets would not be subject to data collection, maintenance, and reporting requirements and would receive more flexible supervision. That threshold change alone would exempt hundreds of institutions from the most rigorous CRA compliance standards.
The proposal also takes aim at how banks receive credit for community development grants and donations. For large banks with more than $10 billion in assets, the proposal would cap at 15% the share of a grant or donation that can be used for indirect or administrative costs by the recipient. Regulators framed this as preventing funds from being “diverted to activist causes or consumed by excessive operating costs”.
Another major shift: The proposed rules would narrow the range of retail banking services the agencies consider to focus on credit services, thereby excluding deposit services. That means banks would no longer receive CRA credit simply for opening branches or taking deposits in low-income areas—the emphasis would be squarely on lending.
Key changes at a glance
$10 billion threshold: Banks with assets below this level would be exempt from CRA data reporting requirements and subject to more flexible exams. 15% overhead cap: Large banks (over $10 billion) could only count grants where no more than 15% goes to recipient overhead or indirect costs. Credit services only: Deposit-taking and branch presence would no longer count toward CRA evaluations—only lending would. 60-day comment period: Comments on the proposed rule are due 60 days after the date of publication in the Federal Register.
The rulemaking would retain the key elements of the regulatory framework that the agencies have generally applied since 1995 and would propose certain substantive, technical, and process-oriented changes. In effect, the FDIC and OCC are attempting to roll back a comprehensive CRA modernization that all three agencies—including the Federal Reserve—finalized in October 2023. A federal judge issued an injunction in March 2024, halting implementation and effectively reverting CRA enforcement to the longstanding 1995 framework, so banks have continued operating under the old rules.
The official text of the proposal is available on the OCC’s website, which links to the full notice of proposed rulemaking.
The backlash
Housing advocates sound the alarm
Consumer groups, lenders, and community organizations warn the proposal would gut affordable housing finance.
The reaction from the housing and community development sector was immediate and forceful. Center for Responsible Lending President Mike Calhoun said the plan would “siphon away investment from the very communities in rural and urban America that most need those funds”.
The National Community Reinvestment Coalition said in a statement that the proposal would “drastically weaken banks’ obligation to meet the credit needs of low- and moderate-income communities.” Jesse Van Tol, NCRC’s president and CEO, said that instead of helping working-class people, “now it lets hundreds of banks off the hook, and dramatically reduces the obligation for others”. Van Tol added that he was particularly troubled by raising the large-bank threshold to $10 billion and leaving banks below $1 billion with no community investment obligation.
David M. Dworkin, president and CEO of the National Housing Conference, called the proposal’s approach to grants and operating support “particularly concerning.” He said it would restrict CRA consideration for private-sector operating support and likely reduce funding for Community Development Financial Institutions and other nonprofits that depend on bank support to operate housing programs. Dworkin also questioned whether the rule would survive a change in administration, warning that constant regulatory ping-ponging adds costs for banks without producing durable policy.
The Federal Reserve’s absence from the proposal raised eyebrows across the industry. The proposal announced Friday by the OCC and FDIC did not include the other major bank regulator, the Federal Reserve. Banking groups had been pushing for a joint proposal from all three regulators, to make sure all three were aligned on the same requirements under the CRA. The Fed declined to comment on why it did not join the rulemaking, but its silence creates uncertainty: banks supervised by the Fed may face different CRA standards than those overseen by the OCC or FDIC.
Why the CRA matters for housing
The Community Reinvestment Act was enacted in 1977 to prevent redlining—the practice of denying credit to residents of certain neighborhoods based on race or income. The law requires federal regulators to evaluate whether banks are meeting the credit needs of the entire communities they serve, including low- and moderate-income areas. Banks that fail CRA exams can face restrictions on mergers, acquisitions, and branch expansions. Over nearly five decades, the law has driven hundreds of billions of dollars into affordable housing, small business lending, and community development projects that might not otherwise attract private capital.
What it means
How this could affect homebuyers and renters
If finalized, the rule could reduce the flow of capital to affordable housing projects and underserved neighborhoods.
For prospective homebuyers—especially first-time buyers, those with modest incomes, or people in rural or historically underserved urban areas—the CRA has been an invisible but powerful force. Banks seeking favorable CRA ratings have an incentive to originate mortgages, fund down payment assistance programs, finance affordable rental housing, and support community development financial institutions that serve borrowers traditional lenders might overlook.
Weakening those incentives could mean fewer mortgage products tailored to low- and moderate-income borrowers, less capital flowing to nonprofit housing counselors and down payment assistance funds, and reduced investment in the kinds of mixed-income developments that create homeownership opportunities in tight markets. The $430 billion in CRA-motivated investment that flowed in 2024 didn’t just build apartments—it financed single-family mortgages, small business loans that help stabilize neighborhoods, and the operating budgets of organizations that help families navigate the path to homeownership.
The 15 percent cap on overhead for grants is particularly contentious. Community development groups argue that effective programs require skilled staff, technology, compliance systems, and operational infrastructure—all of which cost money. A hard cap could make it financially unviable for nonprofits to accept bank funding, or force them to cut services to meet an arbitrary administrative threshold. That, in turn, could reduce the pipeline of homebuyer education, foreclosure prevention counseling, and credit repair services that help families qualify for mortgages.
For renters, the stakes are equally high. Much of the affordable rental housing built in the United States relies on a complex financing structure that includes Low-Income Housing Tax Credits, bank construction loans, and bank equity investments—all of which are motivated in part by CRA credit. If banks face less pressure to invest in these deals, developers will find it harder to close the financing gap, and fewer affordable units will be built. In a country already facing a severe shortage of homes affordable to low-income renters, that could deepen the crisis.
It’s also worth noting what this proposal does not change: the underlying CRA statute remains the law, and banks are still required to serve their entire communities. The question is how rigorously regulators will enforce that mandate, and whether the metrics and incentives will push banks toward meaningful investment or allow them to meet the letter of the law with less impact. If you’re exploring homebuying options and wondering about assistance programs, our guides to low-income buyer programs, zero-down financing, and first-time buyer resources can help you understand what’s available today—though the landscape may shift depending on how this rule evolves.
Context
A decades-long tug-of-war over CRA rules
This is the latest chapter in a long-running debate over how to modernize a 1977 law for the digital banking era.
The CRA has been revised multiple times since its enactment, but the core regulatory framework in use today dates to 1995. For years, banks, community groups, and regulators have agreed that the rules needed updating to reflect the rise of online banking, interstate branching, and changes in how Americans access credit. The question has always been how to modernize it.
In October 2023, all three federal banking agencies—the OCC, FDIC, and Federal Reserve—jointly finalized a comprehensive overhaul meant to expand CRA assessment areas to include digital channels, create clearer benchmarks for performance, and standardize evaluations across agencies. Industry trade groups strongly opposed the 2023 framework, arguing it was overly complex, expanded CRA beyond its statutory intent and would be costly to implement. In February 2024, the Texas Bankers Association and other plaintiffs sued to block the rule, claiming regulators exceeded their legal authority.
The lawsuit succeeded: a federal judge halted the 2023 rule before it took effect, and banks have continued operating under the 1995 regulations. In July 2025, the three agencies proposed rescinding the 2023 rule entirely and reverting to the old framework with minor technical tweaks. That proposal is still pending. Now, the FDIC and OCC have gone a step further with this new rulemaking, which not only abandons the 2023 modernization but also tightens the rules in ways that advocates say will reduce banks’ community development obligations.
The Federal Reserve’s decision not to join this latest proposal adds another layer of complexity. It’s unclear whether the Fed will eventually issue its own version, remain silent, or join the FDIC and OCC later. The result is regulatory fragmentation: banks could face different CRA standards depending on which agency supervises them, creating confusion and inconsistency in how the law is applied nationwide.
Next steps
What happens now, and what you can do
The proposal enters a 60-day public comment period, and the final rule could look different—or never happen at all.
This is a proposed rule, not a final one. Once it’s published in the Federal Register (likely within the next few weeks), the public will have 60 days to submit comments. Regulators are required to read and consider those comments before issuing a final rule. Historically, significant rulemakings attract thousands of comment letters from banks, trade associations, consumer groups, housing advocates, and individual citizens. The volume and substance of those comments can influence whether a rule is finalized as proposed, modified, or withdrawn entirely.
If you work in housing, community development, or banking, or if you’re simply a homebuyer or renter who cares about affordable housing policy, you can submit a comment once the rule is published. Comments are public and become part of the official rulemaking record. You can find instructions for submitting comments on the Federal Register website once the docket opens.
Even if the rule is finalized, it could face legal challenges. The 2023 CRA rule was blocked by a lawsuit, and this proposal—especially given the Federal Reserve’s absence and the controversy over grant restrictions—could likewise end up in court. That means the ultimate fate of these changes may not be known for months or even years.
For now, banks continue to operate under the 1995 CRA framework. If you’re buying a home or looking for affordable housing assistance, the programs and resources available today remain in place. Check out our state-by-state guides (for example, California, Texas, Florida, and New York) to find down payment assistance, first-time buyer programs, and other resources in your area. Many of these programs are supported, directly or indirectly, by CRA-motivated bank investments—so the outcome of this rulemaking could shape their availability in the years ahead.
Quick answers
CRA proposal: common questions
What is the Community Reinvestment Act?
The CRA is a 1977 federal law that requires banks to meet the credit needs of the entire communities they serve, including low- and moderate-income neighborhoods. Federal regulators evaluate banks’ CRA performance and can restrict mergers or expansions if a bank fails to serve its community adequately. The law was enacted to combat redlining and has driven hundreds of billions of dollars into affordable housing and community development.
Why are the FDIC and OCC proposing changes now?
The agencies say the proposal will better align CRA rules with the law’s original intent, ensure grants reach communities rather than being spent on overhead, reduce compliance burdens on smaller banks, and provide clearer standards. Critics argue the real goal is to weaken banks’ community development obligations and reduce funding for nonprofit organizations and affordable housing projects.
Why isn’t the Federal Reserve part of this proposal?
The Federal Reserve, which shares CRA enforcement authority with the FDIC and OCC, declined to join this rulemaking and has not publicly explained why. This creates the possibility that banks supervised by the Fed will face different CRA standards than those overseen by the other two agencies, leading to regulatory inconsistency.
How could this affect me as a homebuyer?
If the proposal reduces banks’ incentives to invest in affordable housing and community development, you may see fewer mortgage products for low- and moderate-income buyers, less funding for down payment assistance programs, reduced support for housing counseling agencies, and fewer affordable rental units being built. The CRA has been a major, though often invisible, driver of programs that help first-time and lower-income buyers access homeownership.
What happens next?
The rule will be published in the Federal Register, triggering a 60-day public comment period. After reviewing comments, the FDIC and OCC will decide whether to finalize the rule as proposed, modify it, or withdraw it. Any final rule could also face legal challenges. Until a final rule takes effect, banks continue to operate under the CRA framework that has been in place since 1995.
Can I submit a comment on this proposal?
Yes. Once the rule is published in the Federal Register, anyone can submit a comment through the regulations.gov website. Comments become part of the public record and regulators are required to consider them before finalizing the rule. Housing advocates, community groups, and industry associations are expected to submit extensive comments, and individual citizens can participate as well.