As I am still a COMPLETE newbie in this arena maybe someone can help me...

Can someone definitively describe the difference between CRA reporting and HMDA reporting. I have Reg. C in front of me and I have a pretty fair idea what goes into that but I keep hearing about CRA reporting. Will some wise CRA expert bestow a little knowledge on this pathetic newbie?

This is not something you can get in a couple of pagraphs. More like a long course of instruction. Some folks have spent years trying to figure CRA out. The Dallas FRB has a booklet Titled "CRA Getting it Right" which you should download as a start.

Do a couple simple things like find out what the banks assessment area is. Look at the CRA Public file for you bank. Ask if any data is now being collected for CRA purposes. If so sit with the person doing that and let them give you an overview of what they are doing.

It also depends on the assest size of your bank as to annual reporting requirements. This requires the collection of data for CRA reporting purposes, similar to HMDA data but with different data being collected and coded. If you are over $250 million in asset size somebody in the bank must have some knowledge of the annual reporting and data collection for the reporting.

Get with someone in your area for some training. BOL has excellent on line training but it may not be basic enough for you to start with.

Others will jump in here with some suggestions, but you have a long road to haul.

Well, that explains a lot. Luckily we are only a $3M Credit Union so I guess we are exempt.

Thank God!!!

Credit Unions are not subject to CRA reporting.

The basic difference is HMDA is for reporting application and lending activity for home loans including home improvement equity loans and any home refinance loans. (I use the word "home" in a generic sense, but it includes any residential property or dwelling.)

CRA is about reporting business loans up to a loan amount of $1Million. You also report certain loans that qualify as "Community Development" as well as certain "third party consortia" loans where you participate in a loan consortia with several other lenders in order to make business, affordable housing or community development loans.

Thank you all for your input. I get it now!

I love BOL!!

You should also know that some commercial loans are HMDA reportable. Be especially careful of the new refinancing rules that were implemented for 2004. In some cases, loans can be CRA/Community Development reportable AND HMDA reportable, as well as CRA/SM Bus-Oth AND HMDA reportable.

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Luckily we are only a $3M Credit Union so I guess we are exempt.

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To many lenders in the banking world that means you're a $3,000 credit union. I'm guessing you meant $3MM or $3 million in asset size? As noted credit unions are exempt from CRA.

They are exempt because the original (note I say original) goal of credit unions was to serve the LMI market. It sounds like you're at a small credit union, possibly doing just this. On the other hand, there are credit unions out there that really suck at serving the needs of the little guy. Many are larger than banks in their states and many post terrible numbers when it comes to CRA, but one can't see this without doing a definative analysis of their lending, something they hide quite effectively.

I have great hope that some day CU's will be forced to tell the truth about what they do. The good ones will be able to prove that they meet the charters goals and serve the LMI population. The bad ones, will show they're deserving of a needs to improve or worse rating. I know of two in my state who would most likely earn this.

It would be of benefit to you to learn more about the CRA as a marketing tool. You will see the banks are focused on showing that many credit unions are not meeting the needs of their communities and therefore do not deserve the tax benefits they are receiving. You can counter this by showing your local banks that you are meeting the goals of the reg, which coincide with the original goals of credit unions way back in the 40's. That is if you are meeting the goals...if you're a CU to the stars, duck your head in the sand and hide with the great hope we don't figure out what you're doing

Again, at your size I'm guessing you're the type of CU we'd like to see out there as a compliment to the banking world. Learning about the CRA can only assist in making the relationship between financial institutions in your area stronger, and you a smarter financial expert!

Hey Dawnie!

I just realized (a few months later) that you had responded to me on this. I don't frequent this forum because, as a credit union, we are exempt. I meant to say that we are a $3 Billion credit union. (While studying Mathematics in college we used M for Million, sorry!)

Can I ask a dumb question? Where does CRA come from? Is there a CRA regulation? Or was it an Act that was passed? I have a feeling that someday large Credit Unions such as myself (who no longer really cater to a group of designated employees) may have to report CRA and I would love to know a bit about it before that time comes!

The Community Reinvestment Act (12 U.S.C. 2901 et seq.), as implemented by Reg BB.

Click here to read the regulation

I'm seeing more and more interesting comments from CU's like yours lately, including local ones in the same boat. Frankly, I think CRA would be good for you or at least level our playing field. If ya'll are doing what you're supposed to be doing, all is great If not..well that will shake out too.

The question about the reg was answered, but I'll give you a quick history on the why. CRA was instituted because some banks were literally drawing a red line around neighborhoods saying "We don't lend there". Of course they'd still take deposits from that area, just not lend. What does this do to a community? It drains all the capital out, and allows no new capital for a community to thrive on. The community falls into disrepair and becomes a slum, in great part because the bank's or financial institutions abandoned it. Think of it personally....you need to repaint your house, but can't afford to pay cash for the paint. You want to borrow, but you're in the red line district No new paint...peeling paint, then broken windows...it all goes downhill fast.

CRA took away the red lines. It's been changed over and over again, and is basically a pretty fair reg at this point.

I always wondered where they got the "MM" for million, too -it's technically incorrect - MM should be 2000. The correct way would be to place a line over the M for every multiple of 1,000. The shorthand was to say MM was a thousand thosuands and use numbers in front of the (faux) roman numerals. We also didn't have to manufacture or craft new characters. But, I guess we're stuck with the way it is... (and now you know the rest of the story!)

When in Rome..... do it your own way...

I learned when I first got into banking (as an examiner) that they do things their own way. Instead of using K for thousands (kilo) the used M. They also used MM for million. I guess it is banking shorthand. Remember, they have their debits and credit backwards too.

But Dawnie - isn't that what Reg. B is all about? What's the need for CRA when it seems to be already covered by ECOA?? Forgive the ignorance...