church loan-CRA?

I have a question on a church loan. This is to purchase a used van, and secured by a van. Simple, right? CRA?

Also, is there an up to date grid of some sort on CRA, that we can use as a crutch? I have one that is old(2001), and I think that is what some loan assitants are using.

Thanks in advance!

Here is a link to a tookit. On the toolkit page is a link to a CD Loan worksheet that may offer you assistance in completing your file on whether this is a community development loan.

http://www.dallasfed.org/ca/epersp/2007/4_2.cfm

You have not provided sufficient information to answer the question on the CRA eligibility of this loan. Without some additional support though, you most likely will not be accorded CRA credit for this loan.

Glo, that's a great tool that Pale suggests.

Are you trying to get community development credit or adding this to your small business LAR?

If you're adding to the SB LAR, keep in mind that churches are usually not for profit.

Here's the thing - if a loan IS reportable as small business, then you cannot report or count it as Community Development.

Normally, a loan to a non-profit organization is NOT reportable as a small business loan UNLESS the loan is secured by commercial real estate and the amount is $1Million or less, in which case, since it would be reported on Line 1e of your Call Report it meets the definition of a small business loan and thus is not reportable as Community Development.

If a loan is not reportable as a small business loan, and it is not a HMDA reportable loan secured by 1-4 family, THEN the loan MIGHT be eligible to report as Community Development IF it meets one of the CD tests.

NOTE - you can have a loan that is as CD as CD can get BUT if it's also reportable as Small Business or it's 1-4 family HMDA reportable, you DON'T get to count it as CD.

So you have a loan to a non-profit that is NOT reportable as Small Business and therefore POTENTIALLY reportable as Community Development - now you need to really look at the purpose of the loan - to purchase a used van.

What will the van be used for? Will it provide transportation to low/mod residents to get to medical appointments, child care and other community services? Will it be used to deliver food to needy families? Or will it be used for the church youth group to go to church camp with no particular emphasis placed on low-mod needs?

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I'm picturing myself at a carnival standing at a carny booth filled with empty bottles sitting in a tray and I'm trying to throw a ball to land in one of the bottles.

The ball is my CD loan, and the bottle is CD recognition by an examiner. Almost impossible to do, but after spending a boat-load of money, I wind up with a huge stuffed animal as my prize which I then have to carry around with me for the rest of the carnival, and a few years after it collects dust around the house, it goes in the next yard sale.

Does that sum up the current experience of a CRA exam?

One thing to keep in mind is that it's usually not enough to check a box on a worksheet stating that the individuals who may benefit from the use of the van are LMI, in order to get you the CRA credit. You will need some help and written documentation from the church to support that more than half of the individuals they serve are LMI or that more than half the individuals who will benefit from the loan are LMI. And, you will want that documentation to include actual income numbers, not just the words "51% are low or moderate income".

At least, that's what our examiners wanted to see in our last CRA exam.

Agreed. There must be a documented basis for qualifying the loan, service, or investment. What, why, how are key concepts to keep in mind.

There is an updated loan data collection guide posted at the FFIEC.gov website. The one on the Dallas fed site is 10 years old and is out-of-date. The Grid posted there is also out-of-date and doesn't include the intermediate small bank carve-out for business loans that also meet the definition of CD loans.