§__.12(l) CRA Consideration for Mortgage Brokerage Activities
§__.12(l) – 2 Q: Some financial institutions broker home mortgage loans. They typically take the borrower’s application and perform other settlement services; however, they do not make the credit decision. The broker institutions may also initially fund these mortgage loans, then immediately assign them to another lender. Because the broker institution does not make the credit…
§__.12(m) Income Level Data
§__.12(m) – 1 Q: Where do institutions find income level data for geographies and individuals? A1. The median family income (MFI) levels for geographies, i.e., census tracts, are calculated using income data from the U.S. Census Bureau’s American Community Survey (ACS) and geographic definitions from the Office of Management and Budget (OMB), and are updated approximately every five…
§__.12(n) Narrow Product Line Clarification for Limited Purpose Institution
§__.12(n) – 1 Q: What constitutes a “narrow product line” in the definition of “limited purpose institution”? A1. An institution offers a narrow product line by limiting its lending activities to a product line other than a traditional retail product line required to be evaluated under the lending test (i.e., home mortgage, small business, and small…
§__.12(n) Factors Affecting Wholesale/Limited Purpose Institution Designation
§__.12(n) – 2 Q: What factors will the Agencies consider to determine whether an institution that, if limited purpose, makes loans outside a narrow product line, or, if wholesale, engages in retail lending, will lose its limited purpose or wholesale designation because of too much other lending? A2. Wholesale institutions may engage in some retail lending without…
§__.12(n) Niche Institutions
§__.12(n) – 3 Q: Do “niche institutions” qualify as limited purpose (or wholesale) institutions? A3. Generally, no. Institutions that are in the business of lending to the public, but specialize in certain types of retail loans (for example, home mortgage or small business loans) to certain types of borrowers (for example, to high-end income level customers or…
§__.12(t) CRA Investment Authority
§__.12(t) – 1 Q: Does the CRA regulation provide authority for institutions to make investments? A1. No. The CRA regulation does not provide authority for institutions to make investments that are not otherwise allowed by Federal law. Source: Interagency Questions & Answers Regarding Community Reinvestment | July 2016
§__.12(t) Mortgage-Backed Securities or Municipal Bonds
§__.12(t) – 2 Q: Are mortgage-backed securities or municipal bonds “qualified investments”? A2. As a general rule, mortgage-backed securities and municipal bonds are not qualified investments because they do not have as their primary purpose community development, as defined in the CRA regulations. Nonetheless, mortgage-backed securities or municipal bonds designed primarily to finance community development generally are…
§__.12(t) FHLB Stocks or Federal Reserve Reserves
§__.12(t) – 3 Q: Are FHLB stocks or unpaid dividend and membership reserves with the Federal Reserve Banks “qualified investments” A3. No. FHLB stocks or unpaid dividends, and membership reserves with the Federal Reserve Banks do not have a sufficient connection to community development to be qualified investments. However, FHLB member institutions may receive CRA consideration as a…
§__.12(t) Qualified Investment Examples
§__.12(t) – 4 Q: What are examples of qualified investments? A4. Examples of qualified investments include, but are not limited to, investments, grants, deposits, or shares in or to: Financial intermediaries (including CDFIs, New Markets Tax Credit-eligible Community Development Entities, CDCs, minority- and women-owned financial institutions, community loan funds, and low-income or community development credit unions) that…
§__.12(t) Charitable Contributions
§__.12(t) – 5 Q: Will an institution receive consideration for charitable contributions as “qualified investments”? A5. Yes, provided they have as their primary purpose community development as defined in the regulations. A charitable contribution, whether in cash or an in-kind contribution of property, is included in the term “grant.” A qualified investment is not disqualified because an…