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#2150244 - 10/18/17 02:40 PM CD Loans & Updated Census Tract Income Levels
CRAGoddess Offline
Junior Member
Joined: Nov 2001
Posts: 40
WV
I'm frequently asked to determine if a loan could potentially qualify as community development while it is in the application stage. When I opine in these situations, I always tell the lender that the determination is subject to change upon full review of the closed loan file.

Now I'm seeing loans that have recently closed, but that began pre-July and before the FFIEC updated the demographics that vastly changed census tract income levels. These loans were previously of benefit to low- or moderate-income areas, but now are not. What to do? Obviously, if there was more than one qualifying factor on the loan, I go with that (and note that the tract was previously low/mod in the write up). But I hate to lose those community development loans in tracts that were previously low/moderate but now are middle/upper, and especially those loans where lender or other staff worked diligently to find and originate in a low/mod tract, but now will not qualify.

What are you doing? Have any of you been through a recent exam experience this year dealing with this? Are examiners willing to give credit in these situations? Thank you.
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#2150543 - 10/19/17 06:31 PM Re: CD Loans & Updated Census Tract Income Levels CRAGoddess
South Central CRA Offline
New Poster
Joined: Dec 2016
Posts: 2
I am in the same situation. I am assuming examiners will assess the loan based on tract information available at the time; particularly if CRA consideration influenced the bank's decision making.

I don't believe the loan no longer being in an LMI tract would disqualify a loan from consideration if thecommunity development hook is economic development or community services. Generally, one needs more than the loan being in an LMI tract to make a case.

A revitalize and stabilize hook would be challenging if the tract was no longer LMI; however, you could still make the case if the tract is located in an area that's included in a state/local/municipal revitalization plan.

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#2150655 - 10/20/17 05:39 PM Re: CD Loans & Updated Census Tract Income Levels CRAGoddess
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 2,132
Connecticut
There are 4 different definitions of community development under CRA and only one of them depends on the tract income classification - that is the "revitalization/stabilization" definition. The definitions do not depend on tract income class.

If the tracts involved are classified as underserved or distressed there is a one year delay before the classification change is effective.
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