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Section 1071 Q&A Week Two

Now that the Section 1071 rule is final, should we still be doing CRA Small Business as we do currently until we must begin the 1071 small business data collection based on the tier applicable to our loan volume? The OCC, the FDIC and the FRB in their 2022 notice of proposed rulemaking regarding CRA indicated that when the 1071 reporting begins CRA covered banks will no longer have to report small business and small farm loans under CRA, because they will be reported under 1071. However, community development activity will continue to be reported under CRA. For HMDA loans…

Section 1071 Q&A Week One

We know that loans will be reportable for both CRA and 1071. What if we collect DemographicInformation and the loan ends up being reportable for CRA? Being reportable for CRA does notdisqualify a covered transaction from being reported under 1071. The PDI would be reportedunder the obligation imposed by 1071. Which Data Points are interpreted differently from 1071 to HMDA? Geocoding would be based on what the Rule calls the “Waterfall” approach which dictates the preferred option is based on the location where the proceeds are used. If that is not known, the address of the headquarters of the borrower…

Free up-to-date SBA Size Standards book from GeoDataVision

It is important for you to be aware that the term “small business,” as outlined in Section 1071, specifically refers to the Small Business Administration (SBA) Regulations Part 121. In order to comply with the Section 1071 and to better understand the classification of a small business, it is essential to consult the updated Part 121 size standards document, which includes the relevant North American Industry Classification System (NAICS) codes. Part 121 complements the $5 million GAR limit for small business borrowers specified in ECOA under Subpart B “Small Business Lending Data Collection” GeoDataVision, a leading provider of financial and…

Free Webinar: Comprehensive review of Section 1071 Rule

Presented by GeoDataVision in partnership with M&M Consulting Brace yourselves! On March 30th, the CFPB unleashed the long-awaited Dodd-Frank Section 1071 Rule, and it’s about to shake the finance world to its core. Thought the CRA data file was a migraine-inducing burden? Section 1071’s reporting requirements will make you beg for mercy. With a jaw-dropping 81 fields to complete for each loan record (compared to a measly 16 for CRA small business loans), this new rule is nothing short of a bureaucratic nightmare. And guess what? “Covered” lenders aren’t just the usual suspects. Now, credit unions, commercial finance companies, and…

Is a Big Fight with Bank Regulators Looming?

On February 13, the ABA Banking Journal bore a headline, “Nichols: ABA won’t ‘sit idly by’, if regulators overstep their authority”. The article went on to cite examples of rule making and regulatory changes “that will do more harm than good.” In particular, the article identified the FDIC’s plan to raise assessment fees and the joint agency rulemaking proposal to update the Community Reinvestment Act. The article also noted that the ABA sued the CFPB “after the CFPB made changes to its exam manual that dramatically expanded the agency’s UDAAP authority.” For sure, the impending rule making for Dodd Frank…

Meaningful and Practical Climate Risk Analysis for Banks – The Climate Risks Banks Face Today

We all know that Climate-Related Risk regulations are in the process. The prudential bank regulators are not waiting for lawmakers to legislate climate risk law, they are actively drafting “guidance” and will be evaluating climate risk exposure as a “Safety and Soundness” issue. It’s not yet official, but regulatory requirements are imminent. Already as exams are being conducted examiners are asking banks if they have done anything to evaluate their climate-related risk exposure! It can be daunting and confusing. But climate risk is real as it exists today. Ask banks in California and Florida if climate-related risk doesn’t exist today!…

“Figures don’t lie” but do regulators figure? Simpson’s Paradox says so

In emails in recent months we’ve warned bankers about the extremely aggressive enforcement of anti-redlining policies. This is becoming more and more obvious every day as more banks get threatened with referral to the DOJ. The word is the DOJ is now approaching a record backlog of potential redlining cases. What we find particularly troublesome is the abuse of statistical analysis as the basis for threatening redlining referrals to the DOJ. The technique features a two-step approach in which the regulator first insists that a bank’s REMA (Reasonably Expected Market Area) is larger than its CRA Assessment Area. Then, having…

2021 reported Community Development and Consortium Lending for the entire country

One of the most important CRA responsibilities for Intermediate-Small Banks and Large Banks is “Community Development Lending”. But while Community Development Lending is critically important, there is very little information available about the Community Development Loan Market. GeoDataVision has captured all the 2021 reported Community Development and Consortium Lending for the entire country and has prepared the data in extremely useful and easy to read market reports for each state. This is the most recent data until the FFIEC releases the 2022 data expected in December 2023. The reports rank each reporting lender based on the value of their reported…

GAO Report Reveals Fair Lending MRA’s – Community Bank rate of issuing MRA’s more than doubles!

Dear Banker, Last year we learned that the Department of Justice Attorney General, Meritt Garland, announced an aggressive “Combatting Redlining Initiative.” At GeoDataVision we’ve observed the impact of this action on a growing number of community banks. However, what came to light this summer in a report from the General Accounting Office is that the Office of the Comptroller of the Currency itself already had initiated several new practices regarding Fair Lending examinations with a very significant impact on Community Banks. Beginning in 2018, the OCC conducted fewer but more targeted Fair Lending examinations of smaller banks. Some of this…

Dramatic Changes in 2022 Census
Tracts Compared to 2021 Tracts

Beware the Dramatic Implications for every bank! The effect of the switch-over from the census tracts for 2021 (based on the 2010 Census) and the 2022 tracts (based on the 2020 Census) cannot be overstated. Not only was there a very significant increase in the number of tracts (from 74,001 to 85,395 – a 15.4% increase), but tens of thousands of tracts changed their income classifications and their majority-minority status too. It is imperative that bank risk officers be aware of and study the implications for their bank’s CRA responsibilities and Fair Lending implications. Not being aware of these changes…

Agencies ramp up redlining actions. Putting pressure on Community Banks to expand Assessment Areas

Since the beginning of 2022, we’ve noticed an increasing number of community banks being pressured to expand their Assessment Areas and to annex nearby urban areas. There have been too many examples that we have seen for this to simply be a coincidence. The phenomenon appears to be emanating from a much more aggressive policy mandate issued by regulatory leaders in Washington DC. In fact, on October 22, 2021, the CFPB and the DOJ announced a new initiative called the “Combatting Redlining Initiative” In their Press Release, the DOJ states, “redlining is not a problem of a bygone era but a practice…

Just when you thought CRA couldn’t get more complicated – it just did!

Dear Banker, If the 2022 CRA NPR has you confused think again. Congresswoman Maxine Waters has just proposed legislation that makes the situation all the more confusing. Ms. Waters has just introduced a bill that would change the definition of small business and would mandate every bank to have “Community Advisory Committees” consisting of “a diverse group of consumer, housing, community development, and other stakeholder groups” that must meet quarterly with bank executives. The foregoing are only some examples of what Chairwoman Waters proposes in her legislation. If you want to get a peek at what’s coming down the HR…

2020 reported Community Development and Consortium Lending for the entire country

One of the most important CRA responsibilities for Intermediate-Small Banks and Large Banks is “Community Development Lending”. But while Community Development Lending is critically important, there is very little information available about the Community Development Loan Market. GeoDataVision has captured all the 2020 reported Community Development and Consortium Lending for the entire country and has prepared the data in extremely useful and easy to read market reports for each state. This is the most recent data until the FFIEC releases the 2021 data expected in December 2022. The reports rank each reporting lender based on the value of their reported…

2022 MSA map available for free on the internet

GeoDataVision is pleased to announce the availability of free interactive Metropolitan Statistical Area Maps on the Internet. MSA’s are a very important factor in Assessment Area delineation for CRA purposes. The map can be used to pan across and zoom into any area within the United States. You can even enter an address to see what MSA the address is located in. Feel free to send your ideas about maps you would like to see GeoDataVision post on the Internet. Simply email your requests and ideas to jean@geodatavision.com

Trident Mortgage

The Trident Mortgage redlining fine should be a reminder to compliance risk management officers about the Fair Lending pitfalls a lender can fall into. It is clear that the DOJ and the “Bureau” have marching orders that differ from that of their predecessors. GeoDataVision Fair Lending Guru, Rocky Pizzarello has developed a document that summarizes the “takeaways” to be learned from the Trident Mortgage case. Mr. Pizzarello is one of the most experienced Fair Lending experts in the country. The bullet point memo he has compiled is a good checklist for monitoring your potential exposure and preventing the catastrophe that…

2022 CRA NPR: Maybe Some Regulators are Listening

There are some signs that regulators are becoming aware of the major problems inherent in the 2022 CRA NPR and are starting to question the cost and benefits of the proposed Rule. In an August 6, speech before the Kansas Bankers Association, FRB Governor Michelle Bowman said, “While I am a strong supporter of the fundamentals behind CRA, and I support community development activities, I am concerned that the proposal does not adequately account for the costs and benefits of certain provisions, and that no attempt has even been made to either ensure that or to analyze whether the benefits exceed the…

CRA NPR would exempt more than 2,000 leading small business lenders from CRA examination in more than 1,000 markets!!

The controversial 2022 CRA NPR comment period ended on Friday, August 5. While the proposed Rule does have some very good improvements in the Regulation, it also had some very serious, if not fatal, flaws. The NPR was long (679 pages) and complicated. In fact, the proposed Rule was so complicated that even the regulators seemed not to understand the strange consequences of their proposed ideas. A good example can be found in the application of the concept of “Major Product Line” which would subject only those retail product loans that constitute at least 15% of the dollar value of…

The Disastrous CRA NPR: Free Live Session with Nationally Recognized CRA Experts Ken Thomas and Len Suzio

Dear Banker,As I write this email there are fewer than 30 days to go before the comment period ends on the proposed CRA Rule that, based on data in the NPR, would increase the CRA exam failure rate by more than 500%.Make no mistake about it, if passed as proposed, the proposed Rule will have serious negative consequences for banks – and the numbers in the proposed rulemaking make that abundantly clear!Nationally recognized CRA experts Ken Thomas who literally wrote the book on CRA and Len Suzio will be interviewed by Dean Stockford, President of M&M Consulting during an informal Internet meeting to…

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