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#1522733 - 03/16/11 08:43 PM church loan-CRA?
Glo Offline
Gold Star
Joined: Jul 2005
Posts: 394
I have a question on a church loan. This is to purchase a used van, and secured by a van. Simple, right? CRA?

Also, is there an up to date grid of some sort on CRA, that we can use as a crutch? I have one that is old(2001), and I think that is what some loan assitants are using.

Thanks in advance! smile

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#1522768 - 03/16/11 09:46 PM Re: church loan-CRA? Glo
Pale Rider Offline
10K Club
Pale Rider
Joined: Aug 2002
Posts: 34,318
under the Lone Star
Here is a link to a tookit. On the toolkit page is a link to a CD Loan worksheet that may offer you assistance in completing your file on whether this is a community development loan.

You have not provided sufficient information to answer the question on the CRA eligibility of this loan. Without some additional support though, you most likely will not be accorded CRA credit for this loan.

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#1522774 - 03/16/11 10:03 PM Re: church loan-CRA? Pale Rider
bOaty Offline
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Joined: Aug 2006
Posts: 4,266
Chillin an grillin
Glo, that's a great tool that Pale suggests.

Are you trying to get community development credit or adding this to your small business LAR?

If you're adding to the SB LAR, keep in mind that churches are usually not for profit.

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#1522789 - 03/16/11 10:48 PM Re: church loan-CRA? bOaty
Princess Romeo Offline

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Princess Romeo
Joined: Jun 2001
Posts: 8,272
Where the heart is
Here's the thing - if a loan IS reportable as small business, then you cannot report or count it as Community Development.

Normally, a loan to a non-profit organization is NOT reportable as a small business loan UNLESS the loan is secured by commercial real estate and the amount is $1Million or less, in which case, since it would be reported on Line 1e of your Call Report it meets the definition of a small business loan and thus is not reportable as Community Development.

If a loan is not reportable as a small business loan, and it is not a HMDA reportable loan secured by 1-4 family, THEN the loan MIGHT be eligible to report as Community Development IF it meets one of the CD tests.

NOTE - you can have a loan that is as CD as CD can get BUT if it's also reportable as Small Business or it's 1-4 family HMDA reportable, you DON'T get to count it as CD.

So you have a loan to a non-profit that is NOT reportable as Small Business and therefore POTENTIALLY reportable as Community Development - now you need to really look at the purpose of the loan - to purchase a used van.

What will the van be used for? Will it provide transportation to low/mod residents to get to medical appointments, child care and other community services? Will it be used to deliver food to needy families? Or will it be used for the church youth group to go to church camp with no particular emphasis placed on low-mod needs?


Another Princess Romeo self-musing down the dark corridors of regulatory compliance:

I'm picturing myself at a carnival standing at a carny booth filled with empty bottles sitting in a tray and I'm trying to throw a ball to land in one of the bottles.

The ball is my CD loan, and the bottle is CD recognition by an examiner. Almost impossible to do, but after spending a boat-load of money, I wind up with a huge stuffed animal as my prize which I then have to carry around with me for the rest of the carnival, and a few years after it collects dust around the house, it goes in the next yard sale.

Does that sum up the current experience of a CRA exam?

Regulations are a poor substitute for ethics.
Just sayin'

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#1525730 - 03/23/11 02:40 PM Re: church loan-CRA? Glo
Rubaiyat Offline
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Joined: Jun 2001
Posts: 1,373
Lido Deck
One thing to keep in mind is that it's usually not enough to check a box on a worksheet stating that the individuals who may benefit from the use of the van are LMI, in order to get you the CRA credit. You will need some help and written documentation from the church to support that more than half of the individuals they serve are LMI or that more than half the individuals who will benefit from the loan are LMI. And, you will want that documentation to include actual income numbers, not just the words "51% are low or moderate income".

At least, that's what our examiners wanted to see in our last CRA exam.
--A bad day at sea is better than a good day at work.

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#1525754 - 03/23/11 02:51 PM Re: church loan-CRA? Rubaiyat
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,281
Agreed. There must be a documented basis for qualifying the loan, service, or investment. What, why, how are key concepts to keep in mind.
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy

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#1526319 - 03/24/11 02:01 PM Re: church loan-CRA? Kathleen O. Blanchard
Karen Tucker Offline
Junior Member
Joined: Mar 2007
Posts: 39
Washington, DC
There is an updated loan data collection guide posted at the website. The one on the Dallas fed site is 10 years old and is out-of-date. The Grid posted there is also out-of-date and doesn't include the intermediate small bank carve-out for business loans that also meet the definition of CD loans.
Last edited by CRAReg; 03/24/11 02:01 PM.
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