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88 almost identical situation occurred soon thereaf- ter in eastern Menlo Park. All told, it is expected that 40 families of color will be displaced in two building complex- es by property owners obtaining their financing from First Republic Bank. In Oakland, First Republic Bank emerged as an outlier, financ- ing many property owners identified by local nonprofits as displacement drivers and serial evictors. When lenders underwrite loans based on increased rents, they are underwriting to dis- placement and harming both families and com- munities. As gentrification pressures increase in many communities and lenders continue to finance displacement, local residents are evicted or become homeless faster than affordable hous- ing can be built. TROUBLING REGULATORY TRENDS It is a challenging time to be advocating for an equity agenda in this regulatory landscape. e Office of the Comptroller of the Cur- rency (OCC) has taken several problematic steps recently, emphasizing that evidence of bank dis- crimination will not necessarily impact a bank's CRA rating. Nor will failing a CRA exam necessarily preclude a bank from merging or expanding. e OCC has also indicated that it wants to streamline the CRA process, making it easier for banks to receive higher scores, despite the fact that 96 percent of banks already receive passing CRA grades. e head of the OCC, Joseph Otting, recently testified that he has personally never observed discrimination. is has raised many eyebrows; Otting was formerly the CEO of OneWest Bank, against which the CRC filed a redlining complaint. Bank financing of displacement should have consequences. CRC believes that banks that originate "displacement mortgages" have sought, and received, CRA credit from regulators when the loans are in LMI neighborhoods and/or when the loans are on housing that is "afford- able" to LMI tenants residing in those proper- ties. is is so even though the loan for which CRA credit is sought will directly (through eviction and removal of affordable units from the market) and indirectly (by hurting ability to access credit and exacerbating local afford- able housing needs) harm the very residents and communities CRA is designed to support. Regulators should hold banks accountable for the consequences of their lending by downgrad- ing CRA ratings for discrimination or financing displacement. Yet regulators appear to be head- ing in the opposite direction. As CRA is under threat, so too are fair hous- ing and fair lending. HUD has suspended the Affirmatively Furthering Fair Housing (AFFH) rule and the tools available to communities to help further its goals. HUD and the Con- sumer Financial Protection Bureau have raised the specter of opening up for reconsideration critical disparate impact analysis. e CFPB has reorganized and seemingly demoted its fair lending enforcement. [Editor's note: In March 2018, CFPB Acting Director Mick Mulvaney directed that the name of the CFPB be changed to the BCFP, the Bureau of Consumer Finan- cial Protection.] e HMDA is a critical tool to ensure that housing needs are being met, to help local officials allocate resources, and to ferret out discrimination. After a much-discussed Reveal investigation highlighting potential redlining conditions in 61 jurisdictions throughout the country, the American Bar Association dis- missed the findings, saying it relied on HMDA data that did not include credit score, loan-to- value, and debt-to-income data that are critical to determining if discrimination is occurring. And yet, Congress recently determined that 85 percent of reporting institutions need not report this crucial data. Under the current BCFP ad- ministration, HMDA reporting and disclosure is unlikely to be a priority. IS IT ALL BAD? Despite challenges, there are positive devel- opments. Our recent analysis of CRA activity in California found that CRA is working, return- ing billions of dollars in reinvestment to Califor- nia communities. Banks that have entered into CRA commitments appear to be doing a much better job than those that have not. To address displacement financing, Cali- fornia community groups have developed an Anti-Displacement Code of Conduct to show banks what they can do to end the financing of displacement and to instead reinvest in the community through an antidisplacement lens that focuses on community and resident stabil- ity. Over 65 organizations have endorsed these principles, and a number of banks have begun conversations about whether they would change their policies and practices. Nonprofit groups continue to innovate and build their own capacity to meet community credit needs. Groups are now working to acquire existing multifamily buildings through the use of innovative financial products, in order to enable working families to remain in those units and ensure that units will remain affordable to community members for years to come. Com- munity land trusts are growing their capacity to build long-term resident and community ownership. On the legislative front, bills are moving in Sacramento that would extend the critical yet reasonable foreclosure protections of the Homeowner Bill of Rights, as well as clarify existing obligations of jurisdictions to affirma- tively further fair housing. Local governments are considering ways to better protect tenants vulnerable to displacement and eviction. Equity in the mortgage market will not be attained until industry participants step up to support equal access to credit and community stability. e industry must be intentional about serving all communities, hiring diverse management and staff, providing adequate language access, ensuring equitable branch and retail locations, offering accessible products like FHA and CRA portfolio loans, and ensuring all customers receive the best-priced product for which they qualify. On policy and lobbying matters, the industry must stand up for equality, access, and consumer protection of vulnerable and underserved communities. Banks and other lenders must consider the consequences of their lending on communities, not just short-term bottom lines.

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