CRA Eligible Tracts and Tract Median Family Income as a percent of AMI
The Community Reinvestment Act (CRA) was passed by Congress in 1977 to encourage banks to extend credit to low and moderate income Americans. The Act was a response to redlining, a common practice involving systematically denying credit or increasing the costs of banking services to communities based on income, race or other discrimination. In practice, CRA requires that each bank’s lending records be evaluated periodically. This evaluation record is taken into account when the institution applies for deposit facilities, including mergers and acquisitions. All depository institutions must collect the necessary data and submit reports annually.
In order to measure whether banks are providing credit to the whole of their communities, CRA looks for loans in low and moderate income areas, as well as areas experiencing economic duress, or that are underserved by banking institutions. PolicyMap now has these locations mapped, according to CRA specifications.
Low and moderate income Census Tracts are based on a comparison of tract median family income to area median family income. If the median family income of the tract is less that 50% of area median family income, then the tract is considered Low. If the tract median family income is greater than or equal to 50% and less than 80% then the tract is Moderate. If the Tract median family income is greater than or equal to 80% and less than 120% then the tract level is
Middle income tracts are not considered in CRA evaluation unless the tract is classified as distressed or underserved. Distressed middle income tracts are those with: (1) Unemployment rate at least 1.5 times the national average or (2) Poverty rate of 20% or greater or (3) Population loss of 10% or more between the 1990 and 2000 census, or a net migration loss of 5% or more between 1995 and 2000. Underserved middle-income tract are those designated by the Economic Research Service of the United States Department of Agriculture with an “urban influence code” of 7, 10, 11 or 12. Lists of these tracts are released annually and available on the CRA website at: http://www.ffiec.gov/cra/examinations.htm.