Don't Blame the Community Reinvestment Act

Homeownership rates and CRA enforcement soared in the 1990s, but sub-prime came later. CRA shouldn't be the scapegoat for the housing meltdown.

Ellen Seidman | August 7, 2009

The mortgage crisis is far from over. Foreclosure filings in the first quarter of 2009 increased 24 percent over the already-heady 2008 levels; April filings were up 1 percent over March and 32 percent over the prior April. During 2008, foreclosure notices were filed on over 2 million properties, and banks took back more than 850,000 properties. Delinquencies continue to climb: 7.88 percent of all mortgages on one- to four-unit buildings were delinquent at the end of 2008, the highest rate on record. For sub-prime loans, the rate was 21.88 percent and almost 14 percent of sub-prime loans were in foreclosure. With home prices still falling -- in March 2009 prices were down 32.2 percent from their 2006 peak -- and unemployment now at 9.4 percent and still rising, it is unlikely the situation will get better any time soon.