That the owner of a business (located in a low-to-moderate income area) is actually hiring low-to-moderate income individuals. I'm not an expert in CRA by any means, but I have yet to see this in writing?

Is this particular examiner going overboard? Or is this a legit request?

This is a common request. Usually it can be satisfied with info on the types of jobs, salaries paid, etc. You need to obtain info from the customer to make your case. Perhaps they can give you salary info with customer names and tax IDs removed.

So, we basically need to confirm where the employees of each business live and their income?

Is this actually required? If our customer refuses to provide us with this information, are we out of luck?

Not each employee specifically. Generally you have to demonstrate that these are truly jobs that pay low/mod income wages, not higher paying jobs.

You could be out of luck if you can't convince them these are low/mod jobs for the most part.

Perhaps a list of job descriptions with pay range.

The past few years, info on jobs, investments, low income housing etc are not taken at face value. The examiners want it documented - they want proof.

For my clarification, is this a Community Development Loan?

I assumed it is community development, because this would not be requested for small business or small farm. Just for CD for jobs creation.

Yea, it's for CD. I guess my question is, is providing the proof required? I don't see how a business located in a LMIA would be hiring outside that area?

Depends on what the jobs require and pay. I have worked in low/mod areas and received much higher pay! Location doesn't prove who they are hiring.

Yes, some sort of proof is required. If it is a new location for the company sometimes there will be news articles that talk about the jobs creation aspect that can be used for examiners. They are not going to take your work for it. You have to show them what kind of jobs to support your assertion that they are providing jobs for low/mod people and not for engineers who commute.

you have to be able to prove up any CD service is benefitting primarily LMI...

you could calculate 80% of the MFI, give that number to the business and ask them to put it in writing that the majority of jobs created were below that number....

CRA really isn't my field, but we have an outside consultant who used to work for the FDIC in this very field. He strong disagrees with the OCC. I guess it will be an interesting meeting.

Thanks for the input guys, I appreciate the help.

Just in the past few years, all of the regulators have been asking for "proof" on CD elements (loans, services, investments).

So, depending upon when he worked with them, things have changed!

When you think about it it makes sense to not just take the bank's word for it since a location doesn't prove much.

While I didn't get to talk him in detail, his response was simple. "Proof" isn't required in the guidance, so the bank isn't rquired to gather it. Given his reputation in the industry I assume he is keeping up with the changes (At least I hope!).

Again, this isnt my area of expertise. I'm gonna defer to him on this one and see what happens at the meeting.

You don't have to prove each job, but you have to show some evidence that they are providing jobs that actually primarily go to low/mod income people.

What kinds of jobs are these? Restaurant jobs are easy to defend.

Clerk jobs at a gym, another is retail at a strip mall across from the projects (Im not joking) and similar types of job. We are not talking hotel management at the Hilton.

Are any of these businesses ones that LMI individuals would frequent? Grocer, Pharmacy, Medical Practice, etc. Just a thought.

Yes they are Tennis.

After a meeting that got very nasty, I have one more question. Does a community development loans primary purpose have to be community development? This little question caused a blow up of epic proportions. A link to the relevant guidance would be greatly appreciated.

I know this may seem silly, but again, I'm not really involved in CRA.

Do you mean the bank had to make the loan specifically as a community development loan? That has never been a requirement in the past. Commercial lending would get a loan request, and in the writeup etc. (hopefully) would identify that community development purposes that were served. Sometimes loans are gleaned from the portfolio that did serve a community development purpose.

If they are saying that the loan had to be developed and originated specifically because it served a community development purpose that is new and nothing I have heard before, even at the regulators CRA conference earlier this year.

The definition in Reg BB...

228.12(h) Community development loan means (1) a loan that has as its primary purpose community development...

Yes, but they never required that that be the only reason you did the loan. I think we need to define what that means and what the regulators are driving at.

The reg refers to the majority dollars of the loan are for that purpose. So we need to know what the examiners are referring to.

If the bank is trying to get credit for a loan where 40% of the proceeds served a CD purpose that won't fly.

If the regulators are saying that CD had to be your main intent in making the loan that is another story altogether.

I agree. I think that definition could be clearer. The answer to ACBbank's question is yes because it's spelled out in the definition, but as to what that really means, I don't know.

Yes, we need to know what his examiners mean. If they mean the majority of the funds, they are correct.

If they mean the intent of the loan....very odd.

I have an exit interview tomorrow. I'll have to specifically ask this question.

Let us know how it goes! Best of luck.

They're talking intent. We have disagreed with the examiner and are taking our case to the EIC when he arrives in 2 weeks. The saga continues.

That is truly bizarre! I have never ever ever come across that.