This will be our first year reporting Community Developments loans as a large bank. As an ISB, we presented a listing of our CDLs during the evaluation and 90% of them would qualify. There were never any repercussions for having one or two not qualify.

As a Large Bank, what's the process when an examiner doesn't agree with the bank's determination that a loan is community development and they don't qualify it? What's the punishment for getting it wrong?

Thanks in advance!

I have never seen any "punishment" for claiming CD loans that examiners disqualify. Having said that you may antagonize an examiner if you inundate them CD loans that don't qualify. We recommend to our clients a three-step process for any CD activity. All the following should be documented in writing:

1 - identify which CD definition applies (sometimes an activity may qualify under multiple CD definitions)
2- explain the rationale for your determination that the activity qualifies
3- collect written documentation substantiating the CD qualifications of the activity you are claiming is qualified

Present all the foregoing to examiners - don't wait for them to ask you for your documentation

Thank you, I appreciate the advice!