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Financial Outsourcing Solutions


FOS Blog

18 Jun



While we’re in the throes of the Covid-19 pandemic, the one thing we don’t need is more work.  But it is an important season to think about how loan programs and modifications can work to our advantage.  Some initiatives can benefit a bank’s CRA program if properly tracked with key details.

In an early March 19, 2020 Interagency Statement, financial institutions were encouraged to work with affected customers and communities, particularly those that are low- and moderate- income.  Agencies emphasized that prudent efforts to modify the terms on new or existing loans for affected low- and moderate-income customers, small businesses, and small farms will receive CRA consideration and not be subject to examiner criticism.  Qualifying community development activities include:

  • Loans, investments or services that support digital access for low- and moderate-income individuals or communities;
  • Loans, investments or services that support access to health care, particularly for low and moderate-income individuals or communities;
  • Economic development activities that sustain small business operations, particularly in low- and moderate-income communities; and
  • Investment or service activities that support provision of food supplies and services for low- and moderate-income individuals or communities.

Have you considered any “special purpose” credit program (new funds) for distressed individuals or businesses?  Have you defined qualifying characteristics and amended your Loan Policy for the program?  Or are you simply considering requests on a case-by-case basis.  A special code for “Covid 19” loans would be beneficial.  And one of the most significant factors is income data, even if not used for loan approval.  You will want to identify and track loans to LMI borrowers and those made in Low-Income Census Tracts.

How about existing loans?  Are you doing Modifications or Refinances?  The difference is important – Refinances are HMDA reportable while Modifications are not.  Regardless of which type of relief you’re offering, you’ll want to be tracking these if due to Covid 19.  Again, a “Covid 19” code and tracking income could be beneficial in a year, or two, or three when your next CRA exam is happening.

And how about those PPP loans?

The FDIC noted in its PPP FAQ that PPP loans will generally receive CRA credit.  Loans for $1 million or less to for-profit small businesses will be considered “small business loans” for CRA purposes.  Loans greater than $1 million to small businesses could be considered “community development” if the proceeds are used to create or retain jobs (economic development purpose) if they benefit primarily low- and moderate- income areas or distressed middle-income areas.  The OCC further added that banks should identify and track PPP loans to small business owners.  Such additional information could include a borrowers’ annual revenue; loans made in LMI census tracts, distressed areas, and underserved areas; loans that benefit LMI individuals, families and communities. They also note that prudent practices also include documenting decisions such as business justifications and alternatives considered.  Some of this tracking information might be available in your CRA software.

Yes, all this tracking is a little extra work now, but could provide great benefit in the future.  Just one more thing to consider in difficult times.

For additional information contact the author at