ACKNOWLEDGEMENTS

This handbook was made possible in part by a grant from the

Campaign for Human Development, Washington, D.C. The grant was given to the National Center for Urban Ethnic Affairs to develop strategies supportive of neighborhood reinvestment.

New Implications for Community

An earlier monograph by the National Center for Urban Ethnic Affairs and the National Training and Information Center provides background on redlining and disinvestment, outlining the need for the disclosure legislation subsequently adopted. ("Urban Disinvestment: Organization, Research and Public Policy"). Another handbook currently being completed will offer a review of various approaches to neighborhood reinvestment with many specific references to individuals and groups working in the area of revitalization. For maximum benefit, these materials should be used in conjunction with this citizen's guide.

Special thanks go to the community representatives who attended the National Center's May Conference on Disclosure and Reinvestment for their comments and suggestions regarding an earlier draft of this handbook.

Thanks goes to DeeDee Tostanoski, Mary Ann Krickus, Chet Haskell, Joe Domzalski and other Center staff people who gave their assistance to

the handbook.

PREFACE

This handbook is for community people, city officials, and representatives of lending institutions--all of whom have a stake in the revitalization of our urban neighborhoods. The material consists of suggested action strategies for the utilization of the Home Mortgage Disclosure Act of 1975. In addition, it provides clarification of the final regulations for the Act and includes a list of people and organizations involved in disclosure actions.

This publication is by no means complete, nor is it intended to be the definitive statement on disclosure legislation. We felt however that certain ideas, references, resources, and strategies should be shared as the implementation of this federal law gets underway. Disclosure is an important tool for organizations--community groups in particular--concerned with lending practices in their neighborhoods. This handbook presents some possible ways of using that tool.

INTRODUCTION

Disclosure: A Step Toward Neighborhood Reinvestment

The Home Mortgage Disclosure Act of 1975 (PL 94-200) was introduced

in Congress in May 1975, and signed into law by President Ford on December 31,

1975.

Briefly, disclosure requires depository institutions to show where

they make loans, what type of loans they grant, and what loans they purchase. The Congressional intent of this legislation is clearly to provide a mechanism enabling citizens to obtain information on lending practices in their neighborhoods. The Act states:

1

SEC. 302 (a) The Congress finds that some depository
institutions have sometimes contributed to the decline
of certain geographic areas by their failure pursuant
to their chartering responsibilities to provide ade-
quate home financing to qualified applicants on reason-
able terms and conditions.

(b) The purpose of this title is to provide the
citizens and public officials of the United States
with sufficient information to enable them to deter-
mine whether depository institutions are filling their
obligations to serve the housing needs of the communi-
ties and neighborhoods in which they are located and
to assist public officials in their determination of
the distribution of public sector investments in a
manner designed to improve the private investment
environment.

(c) Nothing in this title is intended to, nor shall it be construed to, encourage unsound lending practices

or the allocation of credit.

Home Mortgage Disclosure Act of 1975 (PL 94-200). December 31, 1975.
Section 302, "Finding and Purpose". (Emphasis added)

The potential of the Home Mortgage Disclosure Act as a tool for community groups working to maintain the viability of their neighborhoods is broad. Its specific impact for your neighborhood will be shaped primarily by your organization's utilization of the information it provides. What kind of, or how many, programs and actions are needed, for example, will affect the extent to which you use disclosure. Some groups might want data on one or two financial institutions where their residents' deposits are concentrated, while other neighborhood organizations may seek the creation of their own financial institutions. Still others might

mobilize for actions in between these two.

The following are some possible uses of disclosure, summarized in a publication compiled for the State of Pennsylvania.2 It states that the data generated will help to:

1. provide methods for better selection of the CDBG funds and

other revitalization projects;

2. spot areas showing early signs of disinvestment and provide

assistance to turn this trend around;

3. determine if there is a relationship between new rehabilitation/ revitalization efforts and any increase in private investments for these efforts; determine neighborhood housing needs more precisely;

4.

5. determine which private institutions and public agencies will be most effective in various revitalization efforts based on the lending patterns in specific neighborhoods;

6. identify private institutions which show minimal investments

in specific neighborhoods and encourage them to invest in these neighborhoods; 7. use data as a base to evaluate proposed branch openings, re

locations and mergers.

2 "Housing Investment and Conservation". Center for Community Change. Draft report to the Department of Community Affairs, State of Pennsylvania, 1976. Prepared by Jeff Zinsmeyer. p. 23-23.