We are a new large bank CRA data collector as of 2003. I would like to know the pros and cons of having the lenders collect the loan data on their own loans verses a central staff person. If a staff person, how may man hours can I expect for a multi-assessment area bank that closes about 4,000 loans per year, most of which would be CRA or HMDA. Also, has anyone had a bad experience either way.

In my experience, the lenders must verify the required information is obtained but not enter it into the system. I believe it's much easier to train a handful of people on the proper procedures than train numerous people. There should be less margin for error. Unfortunately I've had problems getting the lenders to actually receive the required information.

We are also a large bank as of 1-1-03. About a year ago I implemented procedures for identification of CRA community development loans to be done by lenders. Result: only limited response. Have found most of them by reviewing loan committee minutes and asking lots of questions. I would be interested in knowing how other banks with assets under $1 billion collect the required CRA data. Does anyone have experience using The Attus Group to prepare the CRA Report for submission to the regulators? Thanks.

First of all, good luck. I am with a bank that has 112 branches, 3.5 billion in assets. I've watched us grow from less than 20 branches and have gone through many stages with CRA/HMDA. Our loans are all input in a central location. We are large enough to justify having a special position in the loan operations area who is responsible for all coding for both CRA and HMDA. Of course this persons ability to code properly is only as good as the information that comes to her on commercial or consumer credit memos. It starts with the lender who is responsible for collecting the data, indicating the revenues, purpose (farm, business, CD, etc.). This is the first place where human error comes in. So, the CRA/HMDA rep is then responsible for ensuring the accuracy of the lenders info before the loan is input. And believe me, commercial lenders are hard to get through to. And, they also like to try to brow-beat the loan ops personnel who question their data. Training one or two people on the complexities of these regs is easier than allowing for the potential for every lender in the system to enter data incorrectly. Even so, accuracy can still be an issue. We monitor 50 CRA files and 50 HMDA files quarterly in our compliance department. Our error rates have dropped significantly over the past few years. Employee turnover and retraining always results in new errors. So again, good luck.

Yes, I am the same anonymous again. We use the PCI Wiz System. Its great for both CRA and HMDA. Can't say enough good about their programs. As far as identifying loans to be reported - I would highly recommend adding the required data for CRA to your commercial loan credit memos. Lenders will have to identify: farm, business, community development, etc and indicate the gross annual revenues, property location etc.etc. This information can then go to your mainframe and be downloaded into a system such as PCI, or entered directly into PCI manually.

We've been reporting CRA data for about 5 years and our procedures have changed multiple times. We started out having the loan officers filling out a CRA or HMDA sheet with poor results. For our commercial lenders we designed a CRA sheet that is completed by the commercial loan assistants and signed off by the officer. This sheet also has a HMDA area that the applicant may complete if they are using a financial statement rather than the traditional application to qualify for a HMDA reportable loan. At the end of each month, the new commercial loan register is compared to the Data Listing Report to ensure every loan has been reported and that the loan amount and date is correct. While this has reduced our errors, revenue codes still need to be watched.

HMDA we have centralized which has had a great impact on the error rate. Here, it was a savings to have a trained mortgage associate complete the form rather than have a loan originator take the time to make it accurate.

We get an automated download from our core processor of any new loan or renewal that gets booked. We then go through a process of elimination and scrub to get to our reported loans.

Depending on the codes from the core processor will determine if the loan is a business or consumer loan. Consumer loans are eliminated from the CRA Loan Register (LR).

The drill down then goes to loan amount - and any amount over $1MM is taken off of the LR but put into another file to review for potential Community Develoment loans.

We then look for any loans with a Construction/Development purpose code to be eliminated from the LR but held for another check for Community Development. Also, we have only one department that purchases real estate loans, so I get a report from them on their activity to make sure the Purchased Loans are appropriately reported (original amount - not purchased amount, and the Action Code is Purchased - not Originated, etc.)

Then we look at collateral codes. Any collateral code for residential property eliminates that loan from the LR but marks it for potential Community Development as well as a HMDA cross-check.

With what is left, we review Annual Revenues with a required second look at anything under $1MM in annual revenue. I have found that the Annual Revenue field in our core system is usually accurate for large businesses, but may require a second look for small busineses.

Then we look at the geo-coding for all loans secured by commercial/industrial real estate by comparing the loan address with the collateral address. Differences are communicated back to the loan officer to advise on which is the correct address to use depending if the real estate is substantial or incidental to the credit.

I then do a sampling of files to get a bead on how good the data is at that point.

I could go on, but my head is starting to hurt. Dawnie - got anything for that?

I thank all of you for the time it took you to post your replies. This will help provide a basis for determining our procedures.

In reply to:

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I could go on, but my head is starting to hurt. Dawnie - got anything for that?

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Heh Heh...after a week of side effects (the butterfies I saw over the bed were really colorful) I've gone back to wine. I suggest a good Burgundy or Pinot Noir

To add to Bonnie's answer, I personally review all files over $1MM for CD purposes. My total officer reported CD loans for the last exam period were about $2MM (most were not actually CD loans). The old CRA officer used this figure. I chose to review files and found over $60MM in deals. It's a lenders job to lend, it's your job to report CD deals start digging!

I pull every multi-family property and look at those files as well. Each is geo-coded for low or moderate tracts, and then further viewed for possible below market rents.

The WIZ is great to tell you a bunch of stuff....but what goes in, comes out. Crap in is crap out. We pull a 10% sampling of all commerical loans and review for proper reporting (category - for all loans - as well as small business data if it is below a million). I continue by reviewing all files for lenders who tend to have high error ratios (over 4% in any one category). This sucks..but since I've been reporting the lenders in question to senior management...all of those who aren't actually in senior management have reduced their error ratios (public humiliation...it's a good thing!). I review ALL credit card files (ya that sucks!) but errors in that department are horrible and i'm told by my examiner that's rather typical.

I then pull a listing of all loans completed by lenders and send them the list, with address and revenue codes listed out. (You would be amazed how many times one big business can change a revenue code per year in the minds of some folks). All inconsistancies are changed and...yup...I report the bad guys to senior management.

This leaves me a file at submission with less than a 1% error ratio in all categories.

The same is done for HMDA loans but in another dept. I found they didn't have the expertise, nor the clout to argue with commercial lenders about the correct revenue codes or addresses.

I am involved in most credit decisions over a million, (My bank's CEO always wants to know if he can get CD credit for the deals and it sometimes makes a difference in the desire for a credit).

I do pretty much everything Bonnie does as well, but wanted to add this for you. Forgive your lenders in advance, CRA just isn't their gig I feel that in doing the above, I justify my salary.

Oh I have one more trick that works for me...and may or may not work for you. I look for all "funny" named loans! Eskimo villages tend to have names with alot of K's in them (cultural language thing) and I review those as well. If you have a cultural issue in your assessment areas, looking for the loans that might sound right digs up a few million every year! (well it does for me!)

Thanks so much for that great info!!!