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#1993882 - 02/05/15 07:02 PM Renewing/Extending a Community Development Loan
Ryan Yager Offline
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Joined: Apr 2014
Posts: 21
IL
Once a loan is Community Development, can you keep counting it as Community Development anytime you renew or extend that loan? What if it's in a distressed area?

We are extending a loan for another year. When this loan originated, it was in a distressed area and qualified for CD. Now, that loan is no longer in a distressed area. Can we still claim as CD?

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CRA
#1994059 - 02/06/15 02:38 PM Re: Renewing/Extending a Community Development Loan Ryan Yager
ComplianceNerd Offline
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Joined: Nov 2011
Posts: 378
Texas ...
IMO you can still count a Community Development loan from a prior exam as long as it's still on your books.

The fact that the loan is no longer in a distressed area may kick it out though. Is it at least in a Mod or Low income area?
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#1994202 - 02/06/15 06:06 PM Re: Renewing/Extending a Community Development Loan ComplianceNerd
Tennismom Offline
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Tennismom
Joined: Jan 2004
Posts: 773
Originally Posted By: ETX L Complaince
IMO you can still count a Community Development loan from a prior exam as long as it's still on your books.

The fact that the loan is no longer in a distressed area may kick it out though. Is it at least in a Mod or Low income area?


Community Development loans only count in the year they were originated/booked or renewed and do not carry over from prior exam periods (even if they are still on the books).

Count the loan in the year that it was in a distressed area. Subsequent renewal(s) when not in a distressed area should not be counted, unless it has a community development purpose that would still qualify the loan for community development.

Have you considered that the federal banking agencies have adopted a twelve-month “lag period” immediately after an eligible census tract is reclassified as no longer meeting the criteria for a distressed or underserved area. This additional time permit banks to plan and carry out activities that show responsiveness to local needs in these qualifying areas. The extended window for CRA consideration also acknowledges that certain loans and investments may require an extended amount of time to put in place.

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#1994239 - 02/06/15 07:12 PM Re: Renewing/Extending a Community Development Loan Ryan Yager
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,292
What does carry from year to year is a running total of your community development loans. You need that to manage the portfolio and should be tracking the year it came on the books, when it is renewed, refinanced, modified, etc. Track it for its life so that you don't lose track of what you have.

Then you can say "we have x community development loans on the books, x done in 2013, x in 2014, x in 2015, and know what is being reported in what exam period. You could also add exam in which a loan was covered to the tracking.

So, they are there in concept and add to the full picture, but you need activity in each exam period to get "credit" for that exam period. You can't just make one great big loan and expect that to prop up your program for years to come.
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Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
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