Has anyone else looked at the revisions to the CRA Q&A? Talk about confusing, misleading and uncomparible data. They decided to revise the requirements of the data collection 7 months into the year! I am talking about sec.42(a)-5.
This was the confusing part that required that a refinance be reported as two seperate loans (the renewed amount and the increased amount). Now it seems you have a choice, you can either report it as one loan or two!
How is this information going to be useful, when everyone is reporting differently

Actually it gets more confusing. If you originate a $50,000 loan in January and it paid down to $20,000 and was renewed in September back to the $50,000. You count the $50,000 as 1 loan, and you can count the renewal for $30,000 as another.

On the surface this looks like a renewal with no increase, and would only be counted once. However, with the paydown and renewal back to $50,000 you technically have advanced another $30,000 of new money.

I questioned this to a high level regulator in DC, and was advised this was correct. I then indicated that a banker would have to know the balance owing at the time of all renewals, and the manual process to do this would be very time consuming and very costly. They had no idea how dificult this would be to do.

My question was if I took a conservative approach and just counted it once as a $50,000 loan, would I be violating a regulation. The response was No, but I would be short changing the bank.

That is so true. I thought that the point of all this was consistency. It may have been alot of work to track the renewed amount and the new amount, but we took the time to figure out how to get it done. And now its ok not to do it that way. Maybe it may somewhat short change the bank to go back and report it as one loan. But as long as that is acceptable, and let's face it you are going to be saving hundreds if not thousands of hours of time. Could it be worth it to take the easy way out?
The data that is generated is going to be useless anyway, because everyone has a choice. You could be called the small business leader in your AA, but in reality maybe the other institutions have just opted to report only one loan not two!