Mortgage Trends in Targeted Markets

Although the fair lending laws and the Community Reinvestment Act (CRA) were enacted in the 1960s and 1970s, the 1990s have seen the most rigorous enforcement. There are a number of reasons for the recent increase in regulatory aggressiveness, including the availability of detailed lending data, public disclosure of said data and ratings, and a new commitment by the Justice Department to seriously pursue potential violations of lending guidelines. In addition, the Federal National Mortgage Association (Fannie Mae) and Federal Home Loan Mortgage Corporation (Freddie Mac), two large purchasers of mortgages in the secondary market, have been encouraged to increase their purchase of low-income loans. Thus, the regulatory environment in the 1990s is typically thought to be more effective at channeling mortgage credit toward targeted markets, including low-income individuals, or areas, and minority groups or neighborhoods.