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Section 1071 Q&As post twenty two

Do loan applications and originations for natural persons (individual, DBA, or sole proprietorship) count as a covered application or covered transaction?

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Section 1071 Q&As post twenty one

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. Suggestions for risks to include in our initial risk assessment? Reporting loans and collecting PDI […]

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Section 1071 Q&As post twenty

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 it is determinative. Under CRA you could make a $1 million loan to Walmart and […]

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Section 1071 Q&As post nineteen

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. They define control on page 817 as: The determination of the “status” (minority-owned, etc.) is […]

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Section 1071 Q&As post eighteen

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. Community Development activity will continue to be reported under CRA as indicated in the 2022 […]

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Section 1071 Q&As post seventeen

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 ask them the race, sex, and ethnicity questions, but only about principals who under 10171 […]

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Section 1071 Q&As post fifteen

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 GAR of a business that’s not affiliated with the borrower. If the business is affiliated […]

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Section 1071 Q&As post fourteen

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 correct if I understand your question. That’s one of the main points I was making […]

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Section 1071 Q&As post twelve

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 leasing company, and the loans were to be secured by the leases, we believe that […]

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Section 1071 Q&As post eleven

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 - Credit transaction purchases, purchases of an interest in a pool of credit transactions, and purchases […]

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Section 1071 Q&As post ten

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 the financial institution offers or extends the credit primarily for personal, family, or household purposes. […]

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Section 1071 Q&As post nine

Section 1071 does not contain any reference to a mandatory resubmission of Section 1071 if the error rate exceeds a specific threshold. Is there a mandatory resubmission standard of a HMDA LAR when a filer exceeds a specific error rate? No, a Bureau attorney in response to this question submitted by GeoDataVision explicitly stated to Len […]

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Section 1071 Q&As post eight

Our bank has a subsidiary for some commercial financing such as equipment small ticket loans, floor plan financing, and asset-based lending. I know we need to file their loans on a separate register from the bank. Our question is do we combine the subsidiary and bank loans to determine when we must begin reporting or […]

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Section 1071 Q&As post seven

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 […]

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Section 1071 Q&As post six

For HMDA loans that are also reportable as CRA CD reportable loans now, can we still report them as a CRA CD loan? And if yes, will that change based on the compliance date tier? Please explain. Regarding HMDAa reportable loans that are also qualified as community development, i.e. multi-family, affordable housing, those will continue […]

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Section 1071 Q&As post five

Can you elaborate on what may be meant or intended by “feasibility” in relation to the firewall requirement? If I am reading the preamble and regulation correctly, it appears that feasibility really has more to do with job duties of employees instead of potential software/tech limitations of the institution. For us specifically, all of our […]

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Section 1071 Q&As post four

I just want to confirm that all HMDA reportable transactions are excluded, even if we are not required to report them. We are exempt from open-end HMDA reporting. If I read the preamble correctly, those loans would still be exempt from 1071, correct? Any transactions reported under HMDA would not be reported under Section 1071. […]

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Section 1071 Q&As post three

In the preamble, there is discussion on letters of credit on page 207. We create a note with our letters of credit. The note works like a closed-end line of credit and is only advanced if a claim is made on the letter of credit. The preamble letters of credit not being credit under commentary […]

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