By the Division of Banks


The Community Affairs & Outreach Section is responsible for conducting examinations of state-chartered banks and credit unions to determine compliance with the Massachusetts Community Reinvestment Act (CRA) and for certain mortgage lenders to determine compliance with the Mortgage Lender Community Investment (MLCI) regulation. These examinations also include reviews for compliance with the Equal Credit Opportunity Act (ECOA), the Home Mortgage Disclosure Act (HMDA), and other consumer protection and fair lending laws and regulations. The Community Affairs and Outreach Section is also responsible for conducting outreach efforts to educate Massachusetts consumers regarding credit and basic banking services and administering the regional Mortgage Review Boards and Small Loan Review Boards.

The CRA and the MLCI ensures that financial institutions are meeting the credit needs of the communities which they serve, including low and moderate-income areas, consistent with safe and sound banking practices. Massachusetts is one of several states which has its own CRA statute (M.G.L. c. 167, § 14) and regulation (209 CMR 46.00). In addition, Massachusetts is currently the only state, which examines state-chartered credit unions for compliance with CRA. The Massachusetts CRA statute was enacted by the state legislature in 1982. The implementing regulation was revised in May 1997 and is substantially similar to the Federal CRA regulation, which was revised in May 1995.

Massachusetts is currently the only state that applies CRA-like requirements on its licensed mortgage lenders. On November 29, 2007, the Governor signed into law Chapter 206 of the Acts of 2007, An Act Protecting and Preserving Home Ownership. Chapter 206 amended section 8 of General Laws chapter 255E to now require that the Division include an additional evaluation in its inspection of mortgage lenders that have made 50 or more home mortgage loans in the previous calendar year. This evaluation, MLCI, assesses and provides a publicly available report of the record of the mortgage lender's performance in meeting the mortgage loan credit needs of communities in the Commonwealth.

The CRA and MLCI regulations establish the criteria by which the Division of Banks assesses an institution's record of helping to meet community credit needs. All institutions subject to CRA compliance must delineate one or more assessment areas within which the Division will evaluate its record of helping to meet community credit needs. Massachusetts-chartered credit unions whose membership by-law provisions are not based on residence may delineate their membership as their assessment area. The Commonwealth of Massachusetts is the assessment area for mortgage lenders.

The Division will utilize certain performance tests and standards to evaluate CRA performance. These include the lending, investment, and service tests for large institutions; the community development test for wholesale or limited purpose institutions; the small institution performance standards; the strategic plan; credit union performance standards; and the lending and service tests for mortgage lenders. In addition, the Division will examine institutions for evidence of discriminatory lending practices. Through this fair lending examination process, the Division will evaluate whether credit applicants were treated differently than other applicants due to race, color, religion, national origin, ethnic origin, sex, marital status, age, sexual orientation, physical impairment, or because all or part of an applicant's income derives from a public assistance program, or because of the location of the property. Based on its performance, an institution is assigned one of five ratings: Outstanding, High Satisfactory, Satisfactory, Needs to Improve, or Substantial Noncompliance. These ratings are public information. In evaluating an institution's performance, the Division will prepare a Public Evaluation statement that provides a narrative description of the institution's CRA performance. Institutions are required to maintain a copy of the public evaluation in their public information file and to make the evaluation available upon request.

An institution's CRA performance is taken into account when considering applications for branches; mergers or acquisitions; ATMs; mobile electronic branches; and any other approval of the Division provided that there are no other countervailing financial safety and soundness or other policy considerations.