These special reports have been developed by GeoDataVision to help banks estimate if their performance during 2023 would have been rated at least as satisfactory under the Retail Lending Tests ("RLT"). The RLT uses a combination of market data reported under HMDA and CRA (sometimes inaccurately called "peer" data) and demographic data (called "community" benchmarks in the RLT). For each major product line there are two "Distribution Tests" (Geographic and Borrower) that are broken into 2 "categories" (geographic distribution categories for closed end mortgages are lending in low-income tracts, and lending in moderate-income tracts, while the borrower distribution categories are lending to low-income borrowers and to moderate-income borrowers which are compared to the market benchmarks (the market penetration rates in the HMDA Benchmark Data Report) and to the community or demographic benchmarks in the Community Benchmarks Report).
Similarly, for small business loans there are the geographic distribution tests and borrower distribution tests. GeoDataVision has captured in the Small Business Benchmark Reports the small business market benchmarks for every county. But we cannot compute the business demographic benchmark for each county because the business demographic data is proprietary data. Nevertheless, we believe the market benchmarks are the most accurate and reliable benchmark and satisfactory for the purpose of these reports which is to allow a bank to approximate how their performance would have been rated had the RLT been in effect during 2023.
Within each Benchmark Report there are shaded fields that represent the "calibrated benchmark" for each test and each category. The percentages in the shaded fields represent the lowest possible penetration rate for a bank to attain at least a "low-satisfactory" conclusion for the distribution test and the test category. GeoDataVision computed the calibrated benchmarks by applying the "multipliers" specified in the new rule in Appendix A associated with a "low satisfactory" conclusion.
To complete the Retail Lending Test Estimation exercise a bank would need to compute its low- and moderate-income tract and borrower penetration rates and compare the percentages to the appropriate calibrated benchmark. The RLT does allow a bank to select the most favorable comparison between the calibrated market benchmarks and the calibrated community benchmarks. So, if your result falls below the calibrated market benchmark don't despair because you won't be assigned a "needs to improve" rating unless your penetration rate falls below the community benchmark too.
The foregoing will allow banks to estimate if their "supporting conclusion" under each distribution test category would be at least low satisfactory.
The new rule adds formulae that manipulates the foregoing results to determine a "major product line score" for each assessment area and then applies yet additional formulae to determine an "Assessment Area Recommended Conclusion". Those computations are a subject addressed in the 5-hour webinar series about the new CRA Rule that is available for interested parties. The results of the approximation exercise will give the user an indication if the baseline RLT scores upon which all the additional computations are built indicate the bank is likely to not attain at least a low satisfactory conclusion for a major product line in a given assessment area.
Example how to estimate your performance under the Retail Lending Test (The data in the example is not intended to match the specific data in the report graphics which are provided to show where to locate the calibrated benchmarks)
Bank A Metrics
Bank A originated and purchased 1,000 mortgages in County A of which 40 were in County A’s low-income tracts, and 60 were in moderate-income tracts. At the same time 20 of those mortgages were to low-income borrowers and 50 were to moderate-income borrowers.
Bank A “Metrics” Recap:
Mortgage penetration rate in low-income tracts: 4%
Mortgage penetration rate in low-income tracts: 6%
Mortgage penetration rate to low-income borrowers: 2%
Mortgage penetration rate to moderate-income borrowers: 5%
The market benchmarks and the calibrated market benchmarks data as well as the calibrated community benchmarks can be retrieved from the Special Market and Community Reports as appropriate.
Market Benchmarks: 100,000 mortgages in County A (will be found in HMDA and Small Business Benchmark Reports)
Mortgages in low-income tracts: 5,000 = 5% benchmark and 4% calibrated benchmark
Mortgages in mod-inc. tracts: 10,000=10% benchmark and 8% calibrated benchmark
Mortgages to low-inc. borrowers: 1,000=1% benchmark & calibrated benchmark 0.8%
Mortgages to mod-income borrowers: 3,000=3% benchmark & calibrated benchmark 2.4%
Community Benchmarks: 50,000 Owner-Occupied houses in the county and 40,000 families
OOHU in low-income tracts: 2,000 = 4% benchmark and 2.4% calibrated benchmark
OOHU in moderate-income tracts: 6,000= 12% benchmark and 7.2% calibrated benchmark
Low-income families: 3,000 =7.5% benchmark and 4.5% calibrated benchmark
Moderate-income families: 6,000=15% benchmark and 9.00% calibrated benchmark
Compare Bank Metrics to Calibrated Market Benchmarks
| DISTRIBUTION TEST CATEGORY | Bank Metrics | Calibrated HMDA Mkt Benchmarks | Calibrated Community Benchmarks | Satisfactory |
| Low-Inc Tracts | 4.00% | 4.00% | 2.40% | YES |
| Moderate-Inc Tracts | 6.00% | 8.00% | 7.20% | NO |
| Low-Inc Borrowers | 2.00% | 0.80% | 4.50% | YES |
| Moderate-Inc Borrowers | 5.00% | 2.40% | 9.00% | YES |
