New Paper on Special Purpose Credit Programs as Tool for Greater Equity

December 20, 2023 – Boston, MA – A little-used tool that has been available since 1976 is the focus of a new report released today by the nonprofit Partnership for Financial Equity with support from MassHousing.

Special Purpose Credit Programs, authorized by the federal Equal Credit Opportunity Act, offer tremendous promise, three years removed from George Floyd’s murder and the torrent of corporate commitments to address racial disparities in all aspects of American society.

“Special Purpose Credit Programs promote equity and opportunity, by allowing lenders to respond directly to historical discrimination and disinvestment,” said MassHousing CEO Chrystal Kornegay. “We hope the case studies and recommendations in this report help connect underserved people and places with new, creative sources of capital.”

The report profiles two recently released programs from Eastern Bank and the Federal Home Loan Bank Boston as well as Chase Bank’s national efforts on small business and housing SPCPs.

“SPCPs, properly funded, can be an integral tool to narrow racial wealth gaps in our region,” said Thomas Callahan, executive director of the Partnership for Financial Equity.

Eastern’s Equity Alliance for Business launched in March seeks to meet the needs of business owners with 51% or greater ownership by women or people of color and all their intersectionality, including the LGBTQIA+, veterans, or disabled communities, who may not qualify for access to capital with traditional underwriting standards.

In June, Federal Home Loan Bank of Boston set aside $2.5 million for the launch of Lift Up Homeownership, a pilot program that provides down-payment and closing cost assistance to people of color purchasing their first home in any of the six New England states.

Interest in Special Purpose Credit Programs has been rising in recent years as a campaign led by the National Fair Housing Alliance, along with the Mortgage Bankers Association, convinced regulators to issue clear guidance to lenders.

Connections, Best Practices, Thought Leaders

Partnership for Financial Equity helps financial institutions to stay current on Community Reinvestment Act requirements and engage in important research and timely conversations about investments in low- to moderate-income neighborhoods . Membership donations to Partnership for Financial Equity are a qualified investment under the State’s CRA statute.


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