Greetings BOLers,

My bank has been in the business of purchasing mortgage loans for the benefit of our lending test. This has been a successful strategy for a while now, but the community group who we've generally purchased from is now reducing their activity in the area. As we're looking at other options for mortgage purchases (those exclusively benefiting LMI populations and tracts) we're seeing some pretty rough waters.

My question for you... How has your institution succeeded in putting on quality LMI loans for the benefit of your lending test?

If we have to begin originating in-house, we can, but I think management would prefer the purchase option if we can retain that strategy.

I read an article about specializing in smaller dollar seconds to maximize loan count for capital extended. Open to hearing your thoughts and successful strategies. DM or reply here. Thanks.

It might be helpful to check out local CDFIs or minority/female owned FIs to see if you can partner with them. Or look at regional community organizations that serve larger areas that include you AA. We are only located in two states, but we fund participation loans for an affordable housing organization that has projects throughout the western US. We get CD credit for all the loans, even if they aren't for projects in our AA because the organizations serves a larger area that includes our AA.

Thanks TMatt. I'll try poking around. We are looking, specifically, for mortgage loan purchases that benefit the lending test (borrower profile and geographic). I'll take a look.

Here's a question- has anyone had success with a second mortgage product specifically tailored to down payment assistance for LMI borrower? Sure, the bank would be in a second position, but the total capital extended would be less and the lending test could be satisfied as it doesn't delineate between first and second mortgages.

Any experience here? We want to help this market, but it's very risky lending.