New Jersey is joining the movement across the country to establish a state-level Community Reinvestment Acts (CRA) to ensure financial institutions meet the credit needs of low- and moderate-income (LMI) communities and communities of color equitably throughout New Jersey. This legislation will modernize oversight to reflect today’s financial landscape and address ongoing racial and economic disparities in access to credit.
To this effect, New Jersey Citizen Action Education Fund (NJCAEF) has launched a campaign to educate New Jersey stakeholders. A state-level CRA will help New Jersey more effectively fight redlining, direct mortgage lending, small business lending, and community development of affordable housing to where it is most needed, and equip our state with the tools to better respond to and regulate a rapidly changing financial landscape
Why New Jersey Needs a State CRA
- Redlining and Discrimination Persist: A recent investigation found evidence of unlawful redlining by Republic First Bank in New Jersey. Read the report
- Market Gaps: Non-bank lenders like fintechs dominate New Jersey’s mortgage market (over 56% in 2024), yet face minimal reinvestment obligations.
- Federal CRA Limitations: Recent federal rules aimed at strengthening the CRA were reversed in 2024, further weakening protections and oversight.
- Racial Wealth Gap Has Doubled: According to the Institute for Social Justice, the median net worth of white families in New Jersey is now over 40 times that of Black and Latino families. Read the report
What a New Jersey CRA Would Do
- Cover state-chartered banks, non-bank mortgage lenders, and credit unions.
- Require regular evaluations of institutions' lending, investment, and services in LMI and BIPOC communities.
- Create assessment areas based on where institutions conduct business, not just branch locations.
- Enhance data disclosure, small business lending transparency, and public input in mergers and licensing.
- Authorize enforcement mechanisms including improvement plans and merger denials for low performers.
The Federal Community Reinvestment Act was passed in 1977 as part of the effort to end and reverse the harms from decades of government designed and enforced redlining, which denied generations of low – income and Black and Brown Americans traditional pathways to achieving the American Dream through home and small business ownership. The CRA was enacted to hold banks accountable to their obligations to invest equitably in the communities where they do business.
The federal CRA does not apply to state-chartered banks, to non-bank mortgage lenders or to credit unions leaving them without the obligation to reinvest where they do business and profit. Additionally, the Trump administration rolling back federal CRA rules weakening its oversight and leaving too many banks unchecked. Without strong CAR oversight, communities will not get the investment they need for economic stability through homeownership, small business development or for community development of affordable housing. Underserved communities will suffer in New Jersey and the racial wealth gap now at a staggering currently stands at $600,000. will continue to grow.
State Senator Britinee M. Timberlake and Assemblywoman Verlina Reynolds-Jackson have introduced S2722/A4707, groundbreaking legislation that creates a state-level Community Reinvestment Act. The state CRA proposed in the bill will hold state-chartered banks, non-bank mortgage lenders and credit unions, which are accountable for equitable reinvestment in low- and moderate-income communities, including communities of color. It will also encourage and support financial institutions in New Jersey that already engage in community banking’s best practices and invest equitably the communities that.