e Senior Housing Crime Prevention Foundation

Has anyone examined by the OCC received credit recently (in the last 12 months) for investing in the Senior Housing Crime Prevention Foundation?

While not regulated by the OCC, a few years ago, at another FI (regulated by the FRB), we received positive consideration for an investment with this organization.

We are FDIC and just finished our CRA and Fair Lending exam. They said they would give us credit next time for the SHCPF we purchased after they started our exam.

How are you proving the LMI benefit?

Snip:

The Senior Housing Crime Prevention Foundation (SHCPF) is a Tennessee foundation which was established to provide a vehicle for banks to earn CRA consideration. It has been used by financial institutions in an effort to address Lending, Investments, and/or Servicing credit. This program allows banks to serve an underserved segment of society, the nation’s senior housing residents, who have been classified as a low-to-moderate income group.

SHCPF

Thanks!

Just make sure that you are documenting that the senior center you are choosing is low or moderate income

Yes, we (regulated by FRB) have invested in the SHCPF and received favorable consideration in the past.

Yep, that's the one.

Michigan Bankers Association Has Made Available a Program that can earn a Bank CRA Credits While Providing Support to your Communities.

MBA Senior Housing Crime Prevention Foundation Program (SHCPF)

MBA Service Corporation has partnered with the Senior Housing Crime Prevention Foundation as a way for banks to secure qualified CRA credits by supporting nursing homes and HUD venues in the Senior Crime Stoppers program by eliminating elderly abuse, neglect and crime.


This program has resulted in a 92.55% Reduction of Crime and Litigation and a 97% Conviction Rate. It provides seniors and the infirmed with a sense of Security.

In addition, the direct benefits to the bank are:

Several dollar-for-dollar CRA Credit options; bonds, loan, preferred stock
No risk or exposure on any dollars for loans/investments
Short Term Commitment of 5 years
No loan loss reserve required
Significant workforce to offer direct deposit, low-cost banking services
Positive local recognition and publicity

The downside to the Senior Housing Crime Foundation type of investment is that only a very small portion of the bank's money actually goes to the organization, i.e., part of the income stream off the money invested and not the entire amount of the money invested. Thus, examiners would discount the qualitative value of the investment; and some examiners will only provide consideration for that small income stream portion; it is not consistently handled by examiners from different agencies. You also have to be very careful how you book this investment; follow call report instructions. The purpose of the foundation does meet the requirement to provide a community service to low- or moderate-income individuals as long as the residents of the nursing home are primarily low- or moderate-income.

following up on CRAReg's comments...

you will also have to follow GAAP accounting for this investment, which if non-earning could be required to be written off....I have had a few investments in for profit CDFIs dinged like this....

The way the investment works is that the bank gives ownership to a security, that they (the bank) already own(s) or that SHCPF purchases for them, to SHCPF in exchange for preferred stock. This is a 5-7 year commitment. A portion of the yield from that security then goes to SHCPF and a portion continues to go to the bank.

SHCPF promotes the product siting regulators as giving CRA credit for the full amount of the value of the security. And indeed, that is often the case. The statement CRAReg made about the inconsistency among agencies is very true. But it is also true that examiners from the same regulatory agencies treat it differently. We only received credit for the income stream that is kept by SHCPF which was a fraction of what we had expected to received and a fraction of our actual commitment.

And, yes, be very careful how you book the investment. This is a wonderful organization that does so much to meet a need that is virtually unmet. SHCPF only works with low-income facilities and the program is extremely effective. But our examiner seemed to have a bias against it. He seemed completely unaware and unconvinceable of the need. Crime in nursing homes and low-income elderly HUD facilities is a major problem. The OTS has apparently embraced this foundation and there are many PE's sited on the SHCPF website (which can also be found on the agency websites) where banks are given full credit.

But again, my pet peave, it just depends upon your examiner. This was a major investment for us because we are in many rural markets where investments are very limited (even mortgage backed securitie are very hard to come by). We expected to receive credit for several million dollars and we only received credit for several thousand dollars... a major blow. And there was absolutely no way to have anticipated that we might not get credit. We called several banks that had received credit and found out how they booked the investment. We even called our examiner and he said yes he seemed to remember that banks did get credit for SHCPF investments. We did not have time to get back a letter of opinion from the OCC. However, there we two letters of opinion already out there that we relied on. That was of no consequence.

If you consider this as a CRA investment, I suggest that you fully explain all the investment details in a letter to your regulator and then get a specific opinion back as to how much credit you will receive, before you make the investment. Lots of banks have received full credit. But we did not.

Check out this link from the SHCP website: http://www.shcpfoundation.org/index.php?page=veterans

It talks specifically about CRA credit for these investments, and even has a quote from Sheila Bair that states the following: "The FDIC strongly supports these efforts and we show it by granting CRA credit for loans and investments the banks make in the Foundation. This is an excellent example of how CRA qualifying activities show a positive return for the community, stake holders and ultimately the institution."

Our examiner was given all the information, quotes from the SHCPF foundation website,letters from the OCC, etc. and still, on a seven figure investment, only gave us credit for a five figure income stream. Because of all the supporting documentation out there, even from our own regulator, we were completely blindsided prior to our exam.