If you identify a community development loan and can be documented that the loan will create or retain full time permanent jobs for low to moderate persons, can you still keep this loan as a community development loan if later, but in the same calendar year, the business closes or the loan is foreclosed and those jobs are lost?

Also, if a loan that would retain current full time permanent jobs to low and mods was classified or substandard when made could you still list it on the banks community development loan list or should it not be considered since it is classifed or substandard?

Safety and soundness issues do not impact CRA eligibility of a community development loan at the time of origination. You should be able to report it in the year booked. Performance issues of your borrower later may lead to additional CD opportunities with the collateral.

On a side note, don't let the S&S examiners hear your bank is making substandard loans when booked. They might have an issue with that practice.

I have a different view on this. If a loan is sound when made and qualifies for CRA consideration, I agree that subsequent events that could not have been foreseen in the underwriting should not impact the CRA credit assigned to it.

However, CRA specifically says that CRA activities should be done within the confines of safety and soundness. I would argue that a loan that is substandard when made, regardless of its projected impact on the community, is not a safe and sound practice and, therefore, should not accrue CRA benefit to the bank. The reason is that unsafe and unsound activities such as this are not sustainable and could harm the bank. That's not the point of CRA. AR.

I agree with AnonRegulator. Regulators have made it clear at conferences that loans that are substandard when booked do not qualify for CRA credit.