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#701209 - 03/14/07 05:28 PM CD Purpose
bOaty Offline
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bOaty
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Chillin an grillin
Here's one that has me scratching my head:

Loan secured by vacant land to a non-profit who meets the definition of CD. Purpose of loan is to repay one of it's board members money that he had loaned to the non-profit in 2006.

The non-profit plans to develop the collateral and is using internal resources to do so and will sell the lots upon completion.

The remaining board members will personally service this loan until until the lots are sold and will repay the loan from the sales proceeds.

I'd love to call this a CD loan, the non-profit has a great purpose and has even had an article written about it in our regulator's publication for it's innovative programs, but I'm not sure that I can.

HELP!
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#701221 - 03/14/07 05:37 PM Re: CD Purpose bOaty
Mrs. Rizzo Offline
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Curled up by the fire...
I'd defintely try it...figure out a way to spin the purpose...if it wasn't for this loan then this wouldn't be possible...but that's just me...I try to get credit for everything
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#701243 - 03/14/07 05:53 PM Re: CD Purpose Mrs. Rizzo
bOaty Offline
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I try and take the same approach when I can...If you don't ask for credit you'll never get it. I haven't actually been through an exam and don't want too many 'rotten tomatoes' thrown back in my face when the time comes!
Last edited by boatn shasta; 03/14/07 05:54 PM.
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#701245 - 03/14/07 05:55 PM Re: CD Purpose bOaty
Mrs. Rizzo Offline
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Curled up by the fire...
I wouldn't want too many rotten tomatoes either...then they'll think you don't know what your talking about but I think if it doesn't fall into the SB and SF category and the purpose of the institution itself is worthy then it's worth a shot!
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#701289 - 03/14/07 06:20 PM Re: CD Purpose Mrs. Rizzo
bOaty Offline
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I have another delima...My FI makes many loans in an Enterprise zone. I'm lookg at quite a few loans for construction of commercial buildings in this enterprise zone. I have no idea who will eventually occupy the building or if any jobs will be created and what's more is that many of the tracts are actually middle income, there are no low-income tracts. I'm struggling with whether or not to call all of these loans CD.

Any opinions??
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#701300 - 03/14/07 06:25 PM Re: CD Purpose bOaty
Mrs. Rizzo Offline
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Curled up by the fire...
Isn't the point that these buildings will be bring businesses/jobs to the area contributing to the economic vitally of the area????
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#701313 - 03/14/07 06:32 PM Re: CD Purpose Mrs. Rizzo
bOaty Offline
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Very true...thanks Kerm.
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#701380 - 03/14/07 07:33 PM Re: CD Purpose bOaty
Mrs. Rizzo Offline
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Curled up by the fire...
Didn't mean to come across rude...that's just what I would say to our examiners
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#701994 - 03/15/07 07:21 PM Re: CD Purpose Mrs. Rizzo
bOaty Offline
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Not at all I appreciate your advice.. I didn't want to come across rude either...my initial response was OBVIOUSLY!! But I chose to omit that.
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#702657 - 03/17/07 04:07 AM Re: CD Purpose bOaty
Len S Offline
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Connecticut
With respect to your first question, the answer depends on whether the non-profit is providing community services primarily to LMI persons or in LMI areas. There are many non-profits that have terrific programs but that don't qualify for community development because they are not providing the services primarily to LMI persons or in LMI areas.
As far as the Enterprise Zone is concerned, if the project you are financing is to a small business and has the recognition of the governing board of the Enterpise Zone as consistent with the EZ's purpose that is prima facia evidence that the loan is CD as long as it is not reportable as a small business loan in the first place. It is not unusual to get a document such as this for any projects in an EZ, so make sure you get a copy or require your borrower to get one and to provide a copy for your files.
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#702987 - 03/19/07 05:21 PM Re: CD Purpose Len S
bubs63 Offline
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Highland Park IL
I have received credit for loans in EZs with no other evidence than showing the examiner evidence that the loan was in an EZ. I have also receive credit for loans in empowerment zones.

I do agree with Len, be prepared to discuss these loans and the purpose of the loan and the impact to the area.
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#703155 - 03/19/07 07:12 PM Re: CD Purpose bubs63
bOaty Offline
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Thanks guys!!
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