Navigating the Intersection of CRA Assessment Areas and Fair Lending Risk: Challenges in Delineation and Keys to Avoiding Pitfalls
Community Reinvestment Act (CRA) compliance and fair lending risk management are closely linked, yet the requirements can pull in different directions. Nowhere is this tension clearer than in the delineation of a bank’s CRA assessment area (AA). For CRA purposes, the AA must include the bank’s facilities and areas of substantial lending activity while avoiding the arbitrary exclusion of low- or moderate-income (LMI) census tracts. At the same time, fair lending analysis—particularly redlining reviews—scrutinizes whether the bank’s geographic footprint, marketing, and lending patterns exclude majority-minority census tracts (MMCTs). These two sets of tracts do not always overlap, and both frameworks require the bank to define areas it can reasonably and legitimately serve.