CRA allows us to report either the location of the small business borrower's headquarters or the location where the greatest portion of the proceeds are applied, as indicated by the borrower.

In a 2Q2011 Fed "Consumer Compliance Outlook", page 17, there is an extra sentence in their answer to the question about how to establish the loan location: "A loan location based solely on the collateral location would be inappropriate".

Does anyone know where that is stated in the reg or the CRA Guide?

From the CRA Guide and the FAQ:


Many borrowers have street addresses
in addition to rural route and box
numbers. Institutions should ask their
borrowers to provide the street address
of the main business facility or farm or
the location where the loan proceeds
otherwise will be applied. Moreover, in
many cases in which the borrowers
address consists only of a rural route
number, the institution knows the
location (i.e., the census tract) of the
borrower or loan collateral. Once the
institution has this information
available, it should assign the census
tract to that location (geocode) and
report that information as required
under the regulation.

Where is that extra sentence about it being inappropriate to always use the collateral location?

The instruction says main business office or location where proceeds are used....which is often the collateral location but not necessarily. The collateral location may have nothing to do with where the business is located or with where the loan proceeds are used. That is the point. The bank should not receive credit for a loan just because collateral is in a low or mod area if the proceeds were used in an upper income area.

In other words, you have to read between the lines.