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Affirmative Lending

By on July 31, 2019

Affirmative lending is a practice obligation that federally chartered lenders have to abide by to attempt to do business with the community in which they operate.

This means that a branch in a local community that does not have a loan distribution policy that matches the demographics of the area residents will not be practicing affirmative lending.

You need to know: What lenders hope you never learn about mortgages

The rule is placed on lenders via the Community reinvestment act and encourages lenders to be more involved in the local community.

For example, if a bank opens a branch in an area where the majority of residents are of low-income, it should come up with products that the majority of residents can qualify for.

Otherwise, an employer might just be exploiting low operating costs to do the work required of another location. Adding no value to the local community.

This is indicative of the corporate social responsibility movement that has been growing in recent years.



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