The new CRA Rule has a number of surprises for banks and maybe a surprise or two for the regulators themselves. One of those surprises involves the transition rules in §__.51 as they pertain to the April 1, 2024, the…
Most of the articles published about the new CRA rule have repeated the party line – that the new rule “modernizes” the Regulation, that it will make CRA exams more objective and CRA ratings more consistent, etc. But the new…
Dear Banker, The new CRA Rule contains a “break” for Large banks that would exempt them from having to declare Retail Lending Assessment Areas (“RLAAs”) for any calendar year in which the bank lends more than 80% of its home…
In Parts I and II I explained the devastating impact of the new CRA Rule and what the underlying reasons for that adverse impact are. In Part III I will touch upon what banks are most significantly impacted by the…
In my previous email I explained the devastating impact of the new CRA Rule on the percentage of banks receiving a less than satisfactory CRA Performance Rating. The data in Table 32 within the new Rule demonstrate that if the…
With all the news stories circulating about the new CRA Rule, it’s surprising that not one article has addressed the topic that should be the biggest story of all – the catastrophic implications for banks! What I am referring to…
To determine the size of the small business do we include the entire relationship or just the information for the individual loan? It would be based on the GAR of the borrower and affiliates if borrower elects to provide that…
Will CRA Large Banks still need to report their loan data after this regulation take effect? It is reporting small business image likely that CRA reporting would continue during the transition period. But after that (beginning in 2026) small business…
Do loan applications and originations for natural persons (individual, DBA, or sole proprietorship) count as a covered application or covered transaction?
I do regulatory reporting for a bank as well as their loan loss reserve. Will this affect the allowance calculation?I do regulatory reporting for a bank as well as their loan loss reserve. Will this affect the allowance calculation? No.…
The definition of a small business loan based on revenues and loan size. And how does that differ from the definition of a CRA small business loan? Thank you. Loan size will not be relevant under 1071 unlike CRA where…
If the owners of a minority owned business are not minority individuals, then how do we define a minority owned business? The key to your question is to understand that the Bureau has introduced “control” as an alternative to ownership.…
To be clear, 1071 is replacing CRA reporting or is it in conjunction with CRA reporting? The small business data collected under 1071 will replace small business and small farm data collected under CRA after 1071 is completely phased in.…
I’m confused. You have to ask if LGBTQ+ but you can’t ask about the ownership of the business to determine if there is a principal owner? You must ask if there are any principal owners and if so, you must…
Many bankers hear the term “Statistical Significance” but don’t know what it means and how it is relevant to potential fair lending violations. Typically, when an examiner is evaluating if a bank is redlining, they will calculate a lender’s penetration…
If the affiliate GAR and the non-affiliate GAR combined exceeds $5 million, would that loan no longer be a covered transaction? Would it be permissible to consider both when considering applicability but only report one? No, you never count the…
If you are a HMDA reporter, you also need to determine almost immediately if the application is a HMDA reportable application or an application for 1071 so you know what to collect for demographic data from the applicant. You are…
Are all leases exempt? We finance leases but we are not the lessee Leases are exempt. Exactly how are you structuring the financing of leases? However, if you were to extend a loan to a business such as an automobile…
Where are you getting that this is applicable to CRA? 2022 NPR says 1071 data will replace CRA small business and small farm loan data. Does this mean that Participations are excluded and considered not a covered transaction? Yes –…
Can you discuss in more detail what is meant by consumer designated credit? Consumer-designated credit. The term “covered credit transaction” does not include consumer-designated credit that is used for business or agricultural purposes. A transaction qualifies as consumer-designated credit if…