I am new to posting to this site but use it often. I need some help. We have been doing CRA for about 5 years now and have been thru 2 exams and about 4 data reviews. While doing some research today, I came across something that I am questioning.
If we do a new loan today for $100,000 we would report it on CRA assuming it meets all of the criteria. Next month, the customer comes in and requests $25,000 for new money in addition to the $100,000. We currently have been reporting $100,000 for renewal money and $25,000 for new money for a grand total of $125,000. We have been using the approach you can have one loan renewal per loan per year and not one loan origination per loan per year unless there was an increase.
If we are wrong, how could no one have caught this (including me)? How do I go about fixing this and educating our staff who have done it this way since the changes were implemented. Your help is appreciated!

As I understand this you are reporting 100,000 and then 125,000, for a total of 225,000. Which obviously inflates the origination amounts of the bank.

Tracking renewal increases is unfortunately a very labor intensive process at most places. You can consider adding a field on your mainframe system that allows who ever is boarding a loan, to indicated the renewal increases and use those numbers in putting your reporting together.

You can also add fields in your loan boarding document to indicate for CRA purposes, a specific dollar amount. Your CRA input person could take the data directly off the boarding document.

Because of the hassle involved in tracking renewals and reporting, some institutions have opted to not even bother reporting them. It does short the bank in number and dollar amounts, but they figure the savings is worth it. There is no requirement that you MUST report every loan. If you don't have a lot of renewals, not reporting them will most likely not effect your numbers or percentages to any meaningful degree.

Lets see how many eyebrows that last paragraph raises

Yes, I guess you could say that is exactly what we have been doing.
It appears that we have been wrong for some time. If I understand your post and previous posts, we would report any refinance/renewal or any new money once per year unless new money is advanced again. For example, a loan done in January is reported but if it is redone with no new money in March, not reportable. However, if we would add new money in March, the new money would be reportable but nothing else. Right?
We just recently started using our loan origination system and have automated with CRA Wiz. We are still pretty new to determine if it has been a successful implementation.

I am still stunned that this would not have been caught sooner and I am open to any ideas how to go back and retrain my people. We have had excellent CRA reviews in the past.
It goes to say I will be a busy lady in the coming months with HMDA changes that become more confusing every day, new automation process, and now a complete rescrub of my data and on top of that more training.

Any additional guidance any of you could provide is appreciated. Thanks!

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Lets see how many eyebrows that last paragraph raises

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(That was the best raised eyebrow picture I could find Don).

Anon, I'd suggest you review:

http://www.ffiec.gov/cra/guide.htm

In particular page 12 which covers the changes to reporting that took place in 2001. Renewals and originations as well as extentions of additional credit are covered in debth. In the case of your deal you have two options. Report the entire deal as one loan at $125M or report two loans, one for the renewal at $100M and another for the increase at $25M.

The decision would be based on your loan system and the ease of reporting. Frankly the second option is the better in terms of CRA as it would report 2 small business loans with an average loan amount of $62.5M, but we're not supposed to be thinking about that when we decide how to report

I don't believe in reporting some of my business loans and not others, nor does my examiner. Data integrity this year (well late 2003) included both reported and not reported deals (I didn't have any of the second). I want full credit for the work we do here in serving our market. Every loan makes a difference and the absence of loans from your data could leave your examiner wondering what else you don't know how to report correctly. Not a position I want to be in.

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Frankly the second option is the better in terms of CRA as it would report 2 small business loans with an average loan amount of $62.5M, but we're not supposed to be thinking about that when we decide how to report

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Dawnie - the benefit would depend if the borrower has Gross Annual Revenues of <=$1MM or >$1MM.

LOL Bonnie...and then wouldn't it be nifty if they had a business address in a low income tract!