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#2206421 - 02/15/19 09:37 PM Construction-Permanent Loans with One-Time Close
VanessaCC5 Offline
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Joined: Nov 2017
Posts: 1
I see some prior posts on this topic but many that never got a response so guessing others are struggling with this issue as well.

Construction-to-permanent loan to a for profit entity equal to or less than $1 million. Secured by non-farm, non-residential real estate. The loan has a one-time close and is initially reported on the call report as a “1A2”. In the future when the loan begins amortizing (permanent portion), the loan’s call report code will switch to a “1E1” or “1E2”, per the call report coding instructions. The loan number remains the same – just the call report classification changes.

1. If this loan was originated in 2018 and reclassified to a “1E1” in 2018, can this loan be reported on the CRA small business register if it meets all other requirements?
2. If this loan was originated in 2018 but does not get reclassified in 2018 (still in the construction phase), can this loan be reported on the 2018 CRA Small Business Register?
3. If no to above, can this loan be reported in a future year when it converts to permanent and switches to a “1E1”?

How is your institution handling the above scenario? Have you received any guidance in the past on this?

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CRA
#2206502 - 02/19/19 08:35 PM Re: Construction-Permanent Loans with One-Time Close VanessaCC5
Lori01 Offline
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Joined: Jan 2007
Posts: 138
VT
I recently asked our examiner the same question, although I didn't go into the details of the Call Report, only the that the permanent phase would be in a different year (2019) than the origination year (2018). He told me since it was one note I can report it in 2018.

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#2206751 - 02/21/19 10:09 PM Re: Construction-Permanent Loans with One-Time Close VanessaCC5
mrogersfib Offline
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Joined: Aug 2018
Posts: 116
You are correct that if the loan switches to perm the year that it was originated then it should be reported as small businesses--otherwise it will not be reported as small business. It would be reported in the next year or few years if there is a change in terms that extend the maturity or increase the amount of the loan. So essentially if it remains as construction for 2018 it will not be considered as small business.

https://www.dallasfed.org/~/media/documents/cd/pubs/craloan.pdf

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