Acting Comptroller of the Currency Michael Hsu has encouraged banks to “explore the opportunities available through special purpose credit programs”.
Hsu’s statement follows guidance issued by the Department of Housing and Urban Development that clarifies that for-profit companies’ special-purpose credit programs (SPCP) designed and implemented with the Equal Credit Opportunity Act do not generally violate the Fair Housing Act.
“This guidance confirms that lenders may use properly designed and implemented special purpose credit programs to help address long-standing home mortgage credit needs for groups that have been economically disadvantaged,” said Hsu.
Hsu added that SPCP’s can enable banks to open the door to homeownership for communities that have been historically shut out or otherwise disadvantaged.
Banks offering these programs “can be a significant step in addressing the racial and ethnic homeownership and wealth gaps that persist in the United States,” added Hsu.
In the past year, affordable housing has been a major area of focus by US banks.
In July, the OCC highlighted concerns around inequality.
The comptroller said that the “perpetuation of inequality” was a key problem for both society and trust in the banking system.
He said addressing ‘credit invisibles’, which equates to 45 million Americans without a credit score, improving access to affordable housing, increasing credit availability to minority-led and small businesses, as well as supporting and revitalizing depository institutions was also required.
Last year, US Bank pledged a $15 million fund to award grants dedicated to addressing systemic economic and racial inequalities in small business, affordable housing and workplace development.
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