A local developer presents you with request for a loan to build a grocery store in a depressed area that does not fit your financial institution's usual credit underwriting standards. But the customer tells you that this loan would be good for your FI's CRA rating. Do you make the loan just to improve your CRA rating?
A rep from an investment firm contacts your CFO with an "investment opportunity-of-a-lifetime" that is guaranteed to get a great CRA rating. Even though the return on this product is far below the norm, should you make the investment just to improve your CRA rating?
Human resources sends you a request for funding of the purchase matching bank T-shirts to be worn by bank employees participating in construction of a house in connection with Habitat for Humanity. The memo states that this activity should be categorized as "Community Development". Do you approve the funding because it is CRA-related?
The Community Reinvestment Act (CRA) was passed by Congress in 1977 to encourage financial institutions to make credit available to businesses and individuals in low- and moderate-income neighborhoods. But even after almost 4 decades, financial institutions struggle with the nuances of the differences between "community development" and "community partner". One can help your financial institution with its CRA rating and the other can only help with your standing in the community. Both are good things to do but the decision about whether to put your time, money, and personnel should be made with an understanding of which you are trying to accomplish.
This session will assist you in:
But where do you start? This session will assist you in:
- Understanding the definition of "community development"
- Locating and communicating with community contacts
- Identifying CD loans, investments, and services
- Using the CFPB's newest tool for Rural and Underserved Areas
- Discovering sources for CD activities
- Documenting for credit
WHO SHOULD ATTEND:
- CRA officers;
- Senior Management;
- Loan officers
CRA: Digging for Credit
Questions and Answers