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Banking Agencies Issue Revised CRA Exam Procedures
On April 18, the OCC, FDIC, and Federal Reserve Board released revised Community Reinvestment Act (CRA) examination procedures applicable to institutions with total assets greater than $1.202 billion as of December 31 of either of the previous two calendar years. The procedures incorporate revisions to the CRA interagency questions and answers issued in November 2013. Those revisions generally were intended to: (i) clarify how the agencies consider community development activities that benefit a broader statewide or regional area that includes an institution’s assessment area; (ii) provide guidance related to CRA consideration of, and documentation associated with, investments in nationwide funds; (iii) clarify the consideration of certain community development services, such as service on a community development organization’s board of directors; (iv) address the treatment of loans or investments to organizations that, in turn, invest those funds and use only a portion of the income from their investment to support a community development purpose; and (v) clarify that community development lending performance is always a factor considered in a large institution’s lending test rating.
Prudential Regulators Address Impact Of QM Lending On CRA Ratings
On December 13, the Federal Reserve Board, the FDIC, the OCC, and the NCUA issued an interagency statement to clarify safety and soundness expectations and CRA considerations in light of the CFPB’s ability-to-repay/qualified mortgage rule. The statement emphasizes that institutions may originate both QM and non-QM loans based on their business strategies and risk appetites and that residential mortgage loans “will not be subject to safety-and-soundness criticism based solely on their status as QMs or non-QMs.” Acknowledging that some institutions may choose to originate only or predominantly QM loans, the agencies state that, consistent with recent guidance concerning the fair lending implications of QM-only lending, “the agencies that conduct CRA evaluations do not anticipate that institutions’ decision[s] to originate only QMs, absent other factors, would adversely affect their CRA evaluations.”
Banking Regulators Finalize Revised CRA Guidance
On November 15, the Federal Reserve Board, the FDIC, and the OCC finalized revisions to the “Interagency Questions and Answers Regarding Community Reinvestment” (Q&As). The agencies adopted the revisions largely as proposed, with some minor changes in response to comments. The new Q&As, which include revisions to five questions and answers and two new questions, generally are intended to: (i) clarify how the agencies consider community development activities that benefit a broader statewide or regional area that includes an institution’s assessment area; (ii) provide guidance related to CRA consideration of, and documentation associated with, investments in nationwide funds; (iii) clarify the consideration of certain community development services, such as service on a community development organization’s board of directors; (iv) address the treatment of loans or investments to organizations that, in turn, invest those funds and use only a portion of the income from their investment to support a community development purpose; and (v) clarify that community development lending performance is always a factor considered in a large institution’s lending test rating. The new Q&As take effect when they are published in the Federal Register.
Federal Regulators Issue Fourth Quarter CRA Examination Schedules
On August 30, the OCC and FDIC published schedules of Community Reinvestment Act (CRA) examinations to be conducted in the fourth quarter of 2013.
Banking Agencies Propose Revised CRA Guidance
On March 18, the Federal Reserve Board, the FDIC, and the OCC proposed revisions to the “Interagency Questions and Answers Regarding Community Reinvestment” (Q&As). Focused primarily on community development, the revised Q&As aim to (i) clarify how the agencies consider community development activities outside an institution’s assessment area, both in the broader statewide or regional area and in nationwide funds, (ii) clarify how to determine whether recipients of community services are low- or moderate-income; (iii) explain the consideration of certain community development services, (iv) address the treatment of qualified investments to organizations that use only a portion of the investment to support a community development purpose, and (v) clarify that community development lending should be evaluated in such a way that it may have a positive, neutral, or negative impact on the large institution lending test rating. In remarks to the National Community Reinvestment Coalition on March, 20, 2013, Comptroller Thomas Curry described the proposed changes and stressed that they are the first steps the agencies will take to address issues raised during a 2010 outreach effort to reappraise the CRA and identify gaps between CRA implementation and changes in the structure of the banking industry, and how customers access and use credit and financial products. Mr. Curry also promised training and revised examination procedures to ensure more consistent application of CRA rules. The agencies will accept comments on the revisions for 60 days following publication in the Federal Register.
Federal Banking Regulators Release 2013 CRA Asset-Size Threshold Adjustments
On December 19, the Federal Reserve Board, the Office of the Comptroller of the Currency, and the Federal Deposit Insurance Corporation jointly announced the adjusted thresholds for asset size used to define small and intermediate small banks and savings associations under the Community Reinvestment Act. Effective January 1, 2013, a small bank or savings association will mean an institution that, as of December 31 of either of the past two years, had assets of less than $1.186 billion. An intermediate small bank or savings association will mean an institution with assets of at least $296 million as of December 31 of both of the prior two years, and less than $1.186 billion as of December 31 of either of the prior two years.