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Source: United States Federal Reserve

I want to thank David Dworkin for inviting me to participate in this discussion. I am pleased to be with you to talk about Community Reinvestment Act (CRA) modernization and how this process can help address the housing challenges facing minority and low- and moderate-income (LMI) communities around the country.1 The National Housing Conference (NHC) is an important voice in housing and community development policy, so I look forward to hearing from you.

During the mortgage foreclosure crisis, many families around the country suffered the devastating loss of their home through no fault of their own, and homeownership rates have not recovered to pre-crisis levels for the affected groups. Now, the COVID-19 pandemic is raising a new set of housing challenges for renters and the rental market. The current crisis is hitting LMI households with limited financial resources the hardest, and this is especially true for Black and Latinx households. Data from the Census Household Pulse Survey indicate that 25 percent of Black renters and 22 percent of Hispanic renters were behind on their rent payments as of September, along with 12 percent of White renters.2 Among homeowners, Black and Hispanic households have been “significantly more likely to miss or defer monthly mortgage payments and experience uncertainty about making next month’s payment than white households” during the pandemic.3

Coronavirus Aid, Relief, and Economic Security (CARES) Act emergency payments and supplemental unemployment benefits provided vital support to households in the initial stages of the crisis, and the mortgage forbearance period of up to 360 days in the Act and eviction moratoriums at the federal, state, and local level have provided vital stop-gap stability for many families. There is growing concern about what will happen to individuals who may be behind on their rent or mortgage payments as a result of job loss or reduced hours when eviction moratoriums and mortgage forbearance programs come to an end, especially given uncertainty about whether there will be further fiscal support.

The housing challenges resulting from the COVID-19 pandemic are layered on top of existing challenges in both the homeownership and rental markets. Affordable housing is essential to providing low-income households the stability necessary to engage in employment and schooling, provide for essential needs, and accumulate some financial cushion for emergencies. However, the need for affordable housing has grown at a faster pace than the supply.4 With limited supply of lots and other challenges, new construction in many places has been oriented to higher-end units, leaving more limited supply for households with lower incomes, especially in higher cost cities. Many households have been unable to purchase a home since the last financial crisis due to a confluence of factors, including higher home prices and stricter lending standards.5 For those who have purchased a home, higher home prices have translated into higher debt levels relative to household income.

For renters, available subsidies or programs for affordable housing have fallen short of the need, particularly in higher cost cities, while new higher-end rental housing has increased significantly since the financial crisis. The high cost of renting leaves many families paying a higher share of their income for housing. American Community Survey data from 2019 show that 45 percent of renter households spend more than 30 percent of their monthly income on rent. While 22 percent of renters pay more than half of their income toward rent, this figure jumps to nearly 38 percent for renters earning