Interagency Q&A .12(t) – 6: An institution makes/participates in a community development loan. The loan was provided at a below-market interest rate. Is the lost income resulting from the lower rate a qualified investment?

Compliance > Regulation BB - CRA
Q:  § __.12(t) – 6: An institution makes or participates in a community development loan.  The institution provided the loan at below-market interest rates or “bought down” the interest rate to the borrower.  Is the lost income resulting from the lower interest rate or buy-down a qualified investment?
 
A:  No.  The Agencies will, however, consider the responsiveness, innovativeness, and complexity of the community development loan within the bounds of safe and sound banking practices.
 
 
 
This Interagency Q&A, and others, was released in July 2016.  The 2016 Q&As consolidates and supersedes all previously published “Interagency Questions and Answers Regarding Community Reinvestment,” and were noted as being effective immediately.  They may be found here:  http://www.ffiec.gov/cra/qnadoc.htm
 

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