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#2279780 - 01/12/23 09:56 PM New to CRA
NU Rhules Offline
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NU Rhules
Joined: Mar 2011
Posts: 464
SE, Nebraska
Please forgive the dumb question. I searched this Topic and couldn't find an example. Our activity would be to invest in an apartment building and get CD credit. I'm looking at 12 CFR 25.04(c)(1)(i)(A) where it says in part,
"(1) Affordable housing, which means:
(i) Rental housing:
(A) That is likely to be partially or primarily inhabited by low- or moderate-income individuals or families as demonstrated by median rents that do not and are not projected at the time of the transaction to exceed 30 percent of 80 percent of the area median income;"

So how does "Median rents" equate to "...80% of AMI"? Example, the county's AMI is $90,000. 80% of that is $72,000. 30% of that is $21,600. So, how does the 21,600 equate to a rental figure?? What am I missing?

Thanks in advance!

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#2279859 - 01/16/23 02:33 PM Re: New to CRA NU Rhules
InFairness, CRCM Offline
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InFairness, CRCM
Joined: Nov 2010
Posts: 919
USA
The target for "affordable housing" for LMI is housing cost of 30% of median income or less. Since moderate income is 80% of AMI, affordable housing should have a rent burden of 30% of the 80% AMI amount. In your example, if AMI is $90,000, incomes of $72,000 or less are LMI. Annual housing expense at $72,000 should be no more than $21,600, so monthly rent should not exceed $1,800.
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#2280896 - 02/09/23 08:47 PM Re: New to CRA NU Rhules
NU Rhules Offline
Gold Star
NU Rhules
Joined: Mar 2011
Posts: 464
SE, Nebraska
InFairness, Late thank you for the response. I'm still confused. I guess I need to sort out their definition on how to calculate the Average Median Income. Is that number based on the Geocode where the activity is located? Or is it based on the MSA Average Median Income? I'd like to find that definition pinned down.

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#2280970 - 02/10/23 10:36 PM Re: New to CRA NU Rhules
Len S Offline
Diamond Poster
Joined: Oct 2004
Posts: 2,084
Connecticut
There are 2 different median family income numbers that people constantly get confused by. As explained below, the first is used to determine the income level of tracts whereas the second is used for determining the income class of individuals. That's the number you should be using for determining if the renter is a LMI person.

From the Q&A's

§ __.12(m) Income level
§ __.12(m) – 1: Where do institutions find income level data for geographies and individuals?
A1. The median family income (MFI) levels for geographies, i.e., census tracts, are calculated using income data from the U.S. Census Bureau’s American Community Survey (ACS) and geographic definitions from the Office of Management and Budget (OMB), and are updated approximately every five years. Geographic income data, along with detailed information about the FFIEC’s calculation of geographic MFI data, are available on the FFIEC Web site at http://www.ffiec.gov/cra.htm.
The income levels for individuals are calculated annually by the FFIEC using geographic definitions from the OMB, income data from the ACS, and the Consumer Price Index from the Congressional Budget Office. Individual MFI data for metropolitan statistical areas (MSA) and statewide nonmetropolitan areas, along with detailed information about the FFIEC’s calculation of individual MFI data, are available on the FFIEC Web site at http://www.ffiec.gov/cra.htm
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#2281006 - 02/13/23 03:33 PM Re: New to CRA NU Rhules
NU Rhules Offline
Gold Star
NU Rhules
Joined: Mar 2011
Posts: 464
SE, Nebraska
Most helpful. Thanks. Why is it that all the Compliance answers are in Commentary and Q&A's? Rhetorical
Someone could get rich if they wrote a "Banker's Guide to how to Collect CRA compliant data".

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