The Impact Of Multi-Family Loans On CRA Lending

Multifamily loans make up a small percentage of the overall residential lending volume. However, they have a more significant impact on Community Reinvestment Act-qualified mortgage lending.

A new report by The Urban Institute says multifamily lending constitutes only 7 percent of total residential lending volume, compared with 93 percent for single-family lending, but multifamily lending composes 23 percent of the total CRA-qualified mortgage lending. Also, 36 percent of national multifamily lending is to low- to middle-income communities.

The Urban Institute report also says this trend would be true with or without the CRA. However, two other factors suggest that the CRA is a more substantial factor in the multifamily world.

  • Banks do considerably more LMI multifamily lending and less single-family lending than nonbanks.

  • A greater share of banks’ multifamily LMI loans is within their CRA assessment areas than is the case for single-family mortgages.

Banks do more multifamily lending in the US, according to the report than nonbanks (86 versus 14 percent by loan count and 73 versus 45 percent by dollar volume), while banks do less single-family lending (42 versus 58 percent by loan count and 45 versus 55 percent by dollar volume).

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