CRA aims to reduce redlining—the denial of fair financial services to people in a certain neighborhood—and to meet the credit needs of citizens in low and moderate-income neighborhoods, according to the OCC website.
In conducting CRA examinations, the OCC invites outside comment regarding the bank's service. This month, the New York-based groups Community Voices Heard, Good Jobs New York, Neighborhood Economic Development Advocacy Project (NEDAP), New York Public Interest Research Group (NYPIRG), South Brooklyn Legal Services and Staten Island Legal Services jointly filed a comment letter outlining the practices of Chase that they deem harmful to low and moderate income citizens in New York City.
These practices, the letter states, include redlining, abusive mortgage servicing, and poor Electronic Benefit Transfer (EBT) administration.
The groups claim that Chase engages in "racially disparate lending," leading to mortgage redlining. The letter references a report entitled Paying More for the American Dream, which NEDAP and six other organizations compiled in May 2010.
The report found that Chase increased its prime refinance lending to New York City homeowners in predominantly white neighborhoods by 25.3 percent from 2006 to 2008, while decreasing the same kind of lending to homeowners in communities of color by 22.2 percent, the letter stated. From 2008 to 2010, the report found that applications to Chase for refinance loans increased 64 percent in predominantly white neighborhoods, while decreasing 10 percent in communities of color.
In order to hold Chase accountable for the alleged disparities, the letter requests that OCC evaluate the institution's lending practices at the borough and neighborhood levels, as opposed to relying on aggregate measures for the Metropolitan Statistical Area (MSA).
"If you take such a big area and then average everything you're missing what's really going on in neighborhoods," said Sarah Ludwig, founder and executive director of NEDAP. "That C—putting the Community back into the Community Reinvestment Act—is something very important to many groups like ours."
She said part of the purpose in submitting the letter is not only to bring attention to unsatisfactory practices of the bank, but to hold the bank regulators accountable.
Chase did not respond to a request for comment. In the most recent CRA examination of JPMorgan Chase, dated January 1, 2007, the OCC gave JPMorgan a CRA rating of "Outstanding" for the state of New York. According to OCC's examination procedures, one of the factors of the Lending Test is the percentage of the institution's total home mortgage loans and consumer loans to borrowers of low-, moderate-, middle- and upper-incomes, compared to the percentage of the area population that falls into each of these income categories.
In explaining the 2007 results of the Lending Test, the examination states that the bank provided "excellent distributions of loans to borrowers of different income levels and within geographies of different income levels, as well as excellent volumes of community development."