§__.12(h) Community Development Loan Examples
§__.12(h)-1 Q: What are examples of community development loans? A1: Examples of community development loans include, but are not limited to, loans to borrowers for affordable housing rehabilitation and construction, including construction and permanent financing of multifamily rental property serving low- and moderate-income persons; not-for-profit organizations serving primarily low- and moderate-income housing or other community development needs; borrowers…
§__.12(h) Community Development Lending for non-HMDA Reporters
§__.12(h) – 2 Q: If a retail institution that is not required to report under the Home Mortgage Disclosure Act (HMDA) makes affordable home mortgage loans that would be HMDA-reportable home mortgage loans if it were a reporting institution, or if a small institution that is not required to collect and report loan data under the CRA makes small business…
§__.12(h) Community Development Lending for Intermediate Small Institutions
§__.12(h) – 3 Q: May an intermediate small institution that is not subject to HMDA reporting have home mortgage loans considered as community development loans? Similarly, may an intermediate small institution have small business and small farm loans and consumer loans considered as community development loans? A3: Yes. In instances where intermediate small institutions are not required to…
§__.12(h) Credit Cards and Community Development Lending
§__.12(h) – 4 Q: Do secured credit cards or other credit card programs targeted to low- or moderate-income individuals qualify as community development loans? A4: No. Credit cards issued to low- or moderate-income individuals for household, family, or other personal expenditures, whether as part of a program targeted to such individuals or otherwise, do not qualify as community…
§__.12(h) Stabilizing Effect of LMI Loans
§__.12(h) – 5 Q: The regulation indicates that community development includes “activities that revitalize or stabilize low- or moderate-income geographies.” Do all loans in a low- to moderate-income geography have a stabilizing effect? A5: No. Some loans may provide only indirect or short-term benefits to low- or moderate-income individuals in a low- or moderate-income geography. These loans are not…
§__.12(h) Statewide vs. Assessment Area Benefit
§__.12(h) – 6 Q: Must there be some immediate or direct benefit to the institution’s assessment area(s) to satisfy the regulations’ requirement that qualified investment and community development loans or services benefit an institution’s assessment area(s) or a broader statewide or regional area that includes the institution’s assessment area(s)? A6: No. The regulations recognize that community development…
§__.12(h) Regional Area Definition
§__.12(h) – 7 Q: What is meant by the term “regional area”? A7. A “regional area” may be an intrastate area or a multistate area that includes the financial institution’s assessment area(s). Regional areas typically have some geographic, demographic, and/or economic interdependencies and may conform to commonly accepted delineations, such as “the tri-county area” or the “mid-Atlantic…
§__.12(h) Primary Purpose Clarification
§__.12(h) – 8 Q: What is meant by the term “primary purpose” as that term is used to define what constitutes a community development loan, a qualified investment, or a community development service? A8: A loan, investment, or service has as its primary purpose community development when it is designed for the express purpose of revitalizing…
§__.12(i) Provision of Financial Services Clarification
§__.12(i) – 1 Q: In addition to meeting the definition of “community development” in the regulation, community development services must also be related to the provision of financial services. What is meant by the “provision of financial services”? A1. Providing financial services means providing services of the type generally provided by the financial services industry. Providing…
§__.12(i) Employee or Director Charitable Activities
§__.12(i) – 2 Q: Are personal charitable activities provided by an institution’s employees or directors outside the ordinary course of their employment considered community development services? A2. No. Services must be provided as a representative of the institution. For example, if a financial institution’s director, on her own time and not as a representative of the institution,…