Interagency Q&A .42(b)(2) – 4: When purchasing a participation in a community development loan, which amount should the institution report – the entire amount of the credit originated or the amount of the participation purchased?

Compliance > Regulation BB - CRA
Q:  § __.42(b)(2) – 4: When an institution purchases a participation in a community development loan, which amount should the institution report – the entire amount of the credit originated by the lead lender or the amount of the participation purchased?
 
A:  The institution reports only the amount of the participation purchased as a community development loan.  However, the institution uses the entire amount of the credit originated by the lead lender to determine whether the original credit meets the definition of a “loan to a small business,” “loan to a small farm,” or “community development loan.”  For example, if an institution purchases a $400,000 participation in a business credit that has a community development purpose, and the entire amount of the credit originated by the lead lender is over $1 million, the institution would report $400,000 as a community development loan.
 
 
 
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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