We have several CRA loans to development organizations in which we do a one year construction interest only and then modify to permanent financing. We use the same note and mortgage. Our compliance examiners just left on Friday and I am finishing up my final 2010 scrub. While they were here, one of them told me that these loans are reportable at the time of the modification. She then changed her mind and said that they should have been reported at the time of origination. The examiner looking at fair lending told me today over the phone that they are not reportable at all because they are temporary financing and then we are doing a true modification.

We will continue to do these loans so I really need a definitive answer that I can argue when future examiners come and tell me something different.

1. Your option whether to report at consummation of the construction phase or conversion to permanent phase.

2. If you know going in that you will modify the terms at the completion of the construction then IMO you have approved the financing and terms for the permanent loan therefore it is not a temporary loan and would be reportable.

I agree. Under those circumstances, I would report at initial origination.

I agree. Under those circumstances, I would report at initial origination.