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Federal Reserve Report on The Performance and Profitability of CRA-Related Lending
Section 713 of the Gramm-Leach-Bliley Act (P.L. 106-102) requires the Federal Reserve Board to conduct a comprehensive study of the Community Reinvestment Act of 1977 focusing on 1) default rates; 2) delinquency rates; and 3) the profitability of CRA-related loans. That report was released by the Federal Reserve on July 17, 2000. Despite the acknowledged limitations of the report and its methodology (discussed below), several results are clear.
Summary of the Report

* By every measure, CRA loans are not as profitable as non-CRA loans.

* No institution reported that CRA lending was more profitable than non-CRA lending for home mortgage, refinance, home improvement, or small business loans.

* For home purchase and refinance lending, three times as many institutions reported their CRA-related loans not profitable as compared to non-CRA-related loans.

* One out of three large institutions report that CRA lending in the home mortgage and refinance markets is not profitable.

* Three times the value of CRA home improvement loans are not profitable as compared to non-CRA loans.

* Delinquency rates for CRA loans in the home purchase and refinance market are twice that for non-CRA loans.

* Among all institutions, about 40 percent of CRA special lending programs are not profitable. For large institutions, 58 percent report that their CRA special lending programs are not profitable. This is inconsistent with the safety and soundness requirements of CRA. ...

... Delinquency rates for CRA loans are twice that for non-CRA loans in the market for home purchase and refinance (1.57 percent v. 0.79 percent)....