We just funded a loan which 44% of the units hsve been identified that are occupied by low-moderate income families and the rents are affordable. In order to get credit for this loan, would the percentage need to be greater than 50%? or would 44% be enough.

I would include it

In order for an activity to qualify for community development, its "primary purpose" must be community development. An activity has as its primary purpose community development when it is designed for the "express purpose" of community development. The agencies take one of two approaches to determine if an activity has the express purpose of CD. First, if a majority of the dollars or beneficiaries of the activity "are identifiable to one or more of the enumerated community development purposes, then the activity will be considered to have the requisite primary purpose". Second, when the value of the activity is less than 50% for CD, the activity may still be considered to possess the "requisite primary purpose" if (1) "the express bona fide intent is CD", (2) "the activity is specifically structured to achieve an express CD purpose" and (3) "the activity accomplishes or is reasonably certain to accomplish the CD purpose involved".

So it is possible for you to get CD credit for the project even though fewer than 50% of the beneficiaries are LMI persons as long as you can show the financing had the express purpose of CD by fulfilling the 3 conditions I have just stated. This would mean among other things that the loan request itself explicitly stated it was intended for affordable housing for LMI families.

Thank you.

I guess you could always multiply the principal by 44% and put that as the CD Loan amount.....

If the complex is in a low or mod area, you have a better chance of getting credit becuase you are help revitalize or stabalize that area.

If the loan is not then you will have a tough time proving the loan has CD purpose. Just becuase low or mod individuals live in the complex does not make it CDL. If you could get something for the borrower that they have a program for low mod that my help.

MB Guy - The correct procedures is to report the entire loan amount. During the exam, the examiners will decide how much "weight" is to be given to a particular loan if the entire development is not LMI.

I remember way back in the day arguing this point with the examiners right after the "new" CRA came out. Initially, a housing development had to be more than 50% LMI in order to qualify. This was stated at a particular CRA Conference, and my rather disgusted reply was "So....we're going to be building "the projects" all over again and encouraging economic segregation which can then lead to racial segregation in housing?" This was followed by the sound of a pin dropping in the room.

Yeah - I have a reputation for being a trouble maker at those conferences. Must be why I don't get a whole lot of invites to be on any panels!!!

On a more serious note - it's usually not enough to say that LMI families live at a development. Typically you don't have much proof of the tenants income except for Section 8 housing. You have to show a more concerted effort such as a project plan with a certain percentage of units "set aside" specifically for LMI, or that residents are on Section 8 housing. The problem with just having "affordable" rents is that you don't have to be LMI to enjoy a cheap rent.