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#2032788 - 08/10/15 09:39 PM FHLB Letter of Credit Enhancement - CD Purpose
StellaC Offline
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StellaC
Joined: Dec 2009
Posts: 43
El Monte
We have couple loans that are using FHLB's Letter of Credit Enhancement program to issue a Tax-exempt Bonds for constructing Multi-family buildings.

I would like to get your opinion on if there is any "Shot-in" Community Development Purpose by using FHLB's letter of Credit Enhancement program for those cases. Based on my understanding about the program, it appears to have no CD purpose unless the project offers affordable housing.

However, I might overlook some import facts. Please kindly advise. Thank you very much.

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CRA
#2032894 - 08/11/15 03:44 PM Re: FHLB Letter of Credit Enhancement - CD Purpose StellaC
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
In reading about the program I see nothing that adds a community development twist. Your project either meets a community development purpose or it does not.

If a project qualifies (say affordable housing or revitalization), I suppose the bank could try to garner added "credit" for arranging the LC but the bank is not providing the LC.

If the LC is being used to facilitate community development lending, then the project usually qualifies anyway.

_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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#2032903 - 08/11/15 04:11 PM Re: FHLB Letter of Credit Enhancement - CD Purpose StellaC
StellaC Offline
Junior Member
StellaC
Joined: Dec 2009
Posts: 43
El Monte
Thanks Kathleen,

Your answer is very helpful and confirm my understanding.
In the respect of Revitalization, this housing project is in Moderate Income area. By building a multifamily structure, it appears to attract or retain residents in that area.

However, documentations wise, Demand for housing can be found in Appraisal report to prove there is a need. What other documentations you would recommend us to obtain? Please kindly advise~ Thank you very much.

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#2032922 - 08/11/15 05:17 PM Re: FHLB Letter of Credit Enhancement - CD Purpose StellaC
Kathleen O. Blanchard Offline

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Kathleen O. Blanchard
Joined: Dec 2000
Posts: 21,277
If this project has any affordable housing, you will need documentation of that which often is readily available when it is a new building. Are they advertising that it will be affordable, and provide application packages? Those are good to have. Otherwise, you would need to know the rents and compare to HUD figures.

For revitalization of the area, you could provide information on what was at this location prior to this building, and why this improves the area. Photographs are good for this purpose and may be in the loan file already or there might be news articles about a new project.
_________________________
Kathleen O. Blanchard, CRCM "Kaybee"
HMDA/CRA Training/Consulting/Mapping
The HMDA Academy
www.kaybeescomplianceinsights.com

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