Why can you not claim a construction loan to a low income individual as community developement since it is not HMDA reportable?

A community development loan has community development as its
primary purpose. As defined in the regulations, “community development”

Building a home for a low income individual does not meet the definition of CDL. Now, for example, if you were part of a consortium that redeveloped a low or mod income area. You would get credit.

Curious-- how does a low income individual afford a constructon loan on a SFR.

If this one individual can, then can the bank come up with a program to finance homes for LMI individuals in the community and then take CRA Community Development Credit.

but one of the definitions of community development is affordable housing for low income individuals would that fit this definintion of a CD loan

How would you start a program like that

Not to be Flip or disrespectful but I recommend you buy an hour or two of a good CRA consultants time

A program to build housing for LMI individuals would qualify as a Community Development activity as long as it wasn't HMDA or CRA reportable.

You will want to work with a CDC or an afordable Housing group in your area. Check with your regulator they may have a list of groups.

The construction loan would be considered a temporary loan.

So since it is not HMDA could it be a CD loan since it does provide affordable housing for low income individuals

I think the point here is if the loan is to an individual to build his own house or to a business (for profit or non profit) to build housing for LMI individuals. I believe the regulation states that loans to individuals for their own use are not community development.

Community development loans under CRA mean one of four things: (1) affordable housing for LMI persons, (2) community services, (3) financing businesses for economic development or (4) revitalization or stabilization of LMI tracts or underserved, distressed or disaster area tracts.
Strictly speaking, a loan to a low income person to build house is not necessarily community development unless it can be established that it is part of a program for affordable housing. That means you have to demonstrate that the carrying costs of the home are less than 24% of the HUD EMFI for the MSA or statewide non-MSA in which the house is located in addition to the income qualifications of the borrower.