I am looking for direction. I believe the address used for CRA reporting is either the business address or the address of the collateral if the proceeds were used for the purchase or improvement of the collateral. However I have our compliance officer telling me the address of property used for the proceeds, whether collateral or not, is the address used for geocoding the loan. For instance, I have an unsecured loan and the loan officer indicated that the proceeds are used to improve a property and provided the property address. We geocoded using the business address, however our compliance officer advised that the address of the location that used the funds should have been geocoded. Who is correct?

Either one.

From the CRA guide: A small business or small farm loan is located in the geography where the main business facility or farm is located or where the loan proceeds otherwise will be applied, as indicated by the borrower.

SECTION __.42(a)(3) – 1: Which location should an institution record if a small business loan’s proceeds are used in a variety of locations?
A1.The institution should record the loan location by either the location of the small business borrower’s headquarters or the location where the greatest portion of the proceeds are applied, as indicated by the borrower.

Just have to make sure you are consistent. Seems like an easy concept but sometimes something crazy gets in the way of "easy".

As an example, we code to where the money will be used, but when we lend for lobster traps, you can not code to the middle of the ocean. So we code those to the "business address" (read: home). However, for the boat we code to the dock they port at each night.

CRA: it's never easy!
And now I have ruined lobster for you all...because you will automatically think CRA with every bite. You're welcome

TL;DR: Geocode the address of where the funds will be going to if the primary purpose is based off of a geography vs LMI residents.

CRA benefit is based on two things, geography, and people. Utilizing the Loan Data Collection Grid as the basis of our decision let's create a few examples. First let's say our borrower utilizes a multifamily property as collateral, but uses the funds to improve another one of their multifamily units. In this instance, we have to base our decision off of people who have benefited; basically are the units affordable to people earning less than 80% of the Area Median Family Income and no more than 30% of their income (Conservative approach for OCC regulated banks). So, really geography and the collateral aren't going to be the basis of our decision in determining if the project possesses a primary purpose.

Example two, our borrower is a municipal organization that utilizes one of their buildings as collateral, but they are going to be using the funds to install a broad band system into a neighborhood. In this instance, it is going to be important to geocode where the beneficiaries of the loan are located. For instance, a school can qualify for a loan, investment, or service simply because it is located in a low- to moderate-income census tract, or middle-income distressed or underserved area simply because we can reasonably assume that the majority of the people attending that school will be coming from an LMI geography.

So in short, are you qualifying your loan because it's benefiting the census tract, or LMI people specifically? If it is based on geography you need to be geocoding where the funds will be benefiting. Otherwise, if your customers are taking a cash out refi and you have no idea where the funds are going--it just doesn't work.