Skip to content
BOL Conferences
Thread Options
#153130 - 01/23/04 07:29 PM Targeting Low-mod AAs
skinnyminny Offline
Gold Star
skinnyminny
Joined: Mar 2002
Posts: 395
Heaven in comparison to my pri...
We're trying to pump some life into our CRA program. In doing so, we've decided to offer special (mortgage\HELOC) pricing programs (low down payment, below market rate, limit on maximum income to qualify) to our low-mod AAs. However, the community group that we are working with also helps census tracts that are outside our AA.

Questions:

1) If, by some chance, we receive numerous applications from low-mod applicants outside our AA, and we make these loans under our normal lending programs, will our regulator then say that we should include those areas in our AA?

2) Will the bank receives any points for the effort of reaching out to low-mod areas in its AA, even though the results (# of loans) may not be significant? Or will the regulator say "Nice try, but where are the results?"

Your comments please. Thanks.

Return to Top
CRA
#153131 - 01/23/04 07:57 PM Re: Targeting Low-mod AAs
Don_Narup Offline

Power Poster
Joined: Jul 2001
Posts: 3,708
Las Vegas Nevada
Developing special loan products for low/mod ares gets you lots of points. as long as you Sincerely market them in the AA the actual results may not matter.

One question to ask yourself is if there are limited results, does it mean the product did not meet the specific needs of the community?

As far as recommending a change in AA, unless you are focused and marketing out of area and not much on inside the AA, several question can be raised. One of them being should the AA be increased.
_________________________
Compliance Analysis and Research - Software for your CRA/HMDA analysis needs

Return to Top
#153132 - 01/23/04 08:35 PM Re: Targeting Low-mod AAs
HRH Dawnie Offline
Power Poster
HRH Dawnie
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
Don brings up a good point that you need to ask yourself. Does the community really need the product you are going to market? If you do your research and determine that there is a need, go forth and have a ball!

Many times banks roll out programs without doing the important market research. This is when you will hear your regulators say...Nice try doofus, how about the results? (Ok doofus they probably reserve for drinking sessions when you leave..but it's sometimes implied)

If you have success outside of your AA's due to the locality that the partner is serving you shouldn't need to expand your AA. Unless your inside/outside ratio is horrible now, and you're expecting a very significant change due to the product success, this shouldn't be a worry for you. I actually receive credit for work I'm doing outside of my AA's because I'm the only bank willing to make the effort to serve these folks. I don't expand my AA's to cover their areas because I can't reasonably serve all of the area and don't have branch locations there, but the services I am providing are so needed I get CRA credit anyhoo.

This might be the case for you as well if you document how desperately the services are needed (ie Is anyone lending there?) and how you stepped up to the plate to provide them.

Good luck!!! Sounds like your heart is in the right place.
_________________________
Dawn Coursey VP/CRA Queen

CRA Rating is in...Oh who cares...I'm home with the baby.

Return to Top
#153133 - 01/23/04 09:08 PM Re: Targeting Low-mod AAs
skinnyminny Offline
Gold Star
skinnyminny
Joined: Mar 2002
Posts: 395
Heaven in comparison to my pri...
Dawnie:

We met with the community group and this is the sort of product they are looking for (along with a program for educating first time home buyers, which is no problem).

However, based upon your experience, will there be any regulatory criticism if we limit this product to low-mods in our AA? We don't want to push this product outside of our AA because we wouldn't be able to handle such a large area. (and we wouldn't want to service these outside areas)

Return to Top
#153134 - 01/23/04 09:19 PM Re: Targeting Low-mod AAs
HRH Dawnie Offline
Power Poster
HRH Dawnie
Joined: Aug 2002
Posts: 7,353
Anchorage Alaska
A bank is allowed to limit their offerings to the areas they are able to serve (as long as we're not talking redlining within an AA). So I don't see any issues there at all. We often turn down loans outside of our state due to the lack of ability to service the deal. An examiner wouldn't see that as unreasonable at all.

What I do see being an issue is how to qualify the clients...are you going to have the partner entity pre-screen for locations within your AA's? (ie are they geocoding?) You might want to make an effort to provide a nice glossy map with your brochure that clearly defines the areas you are offering the program within so you have no issues with properties coming up that are one block outside of your chosen area. This would keep you out of hot water with your partner
_________________________
Dawn Coursey VP/CRA Queen

CRA Rating is in...Oh who cares...I'm home with the baby.

Return to Top