Ppr Int 53Dc8C15Ea9169Dd Community Reinvestment Act Cra Consideration For Activities In Re - Ppr Int 53Dc8C15Ea9169Dd Community.
Summary
Frequently asked questions from the Federal Reserve Board, the FDIC and the Office of the Comptroller of the Currency on Community Reinvestment Act consideration for bank activities in response to the coronavirus, issued May 27, 2020 and updated March 5, 2021 to add questions 14 to 18. The agencies treat COVID-19 disaster declarations as CRA designated disaster areas and give favorable consideration to activities that protect public health and safety, particularly for low- or moderate-income people and places. PPP loans of $1 million or less count as small business loans under the retail lending test, larger PPP loans can count as community development loans, and those in low- or moderate-income or distressed geographies qualify automatically. Processing PPP applications earns no service test credit, and loans rescinded under the SBA safe harbor are not counted.
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Board of Governors of the Federal Reserve System
Federal Deposit Insurance Corporation
Office of the Comptroller of the Currency
May 27, 2020 (updated March 5, 2021, to add questions 14–18)
Community Reinvestment Act (CRA)
Consideration for Activities in Response to the Coronavirus
Frequently Asked Questions (FAQs)
Question 1: Are COVID-19 affected states and jurisdictions considered CRA designated
disaster areas?
Response 1: The agencies believe that the Coronavirus Disease (COVID-19) national
emergency raises unique needs for revitalization and stabilization activities
that differ from those typically undertaken in response to natural disasters
or other emergencies. The Federal Emergency Management Agency
(FEMA) has issued major disaster declarations that include assistance for
emergency protective measures (Public Assistance Category B) for all 50
states, the District of Columbia, and certain U.S. territories in connection
with COVID-19. Areas identified for Category B assistance are not
normally considered designated disaster areas under CRA because of the
temporary nature of the activities covered under this category of assistance.
However, the agencies believe that it is appropriate to recognize such
COVID-19 designated disaster areas due to the circumstances of this
national pandemic; therefore, the agencies will grant consideration for
activities that revitalize or stabilize these areas by protecting public health
and safety, 1 particularly for low- or moderate-income individuals, low- or
moderate-income geographies, or distressed or underserved
nonmetropolitan middle-income geographies. Examples of qualified
activities include loans, investments, or community development services
that support:
• Emergency medical care, including medical facility services and
supplies, temporary medical facilities, and enhanced medical/hospital
capacity;
• Purchase and distribution of personal protective equipment;
• Provision of emergency food supplies; or
1
https://www.fema.gov/news-release/2020/03/19/coronavirus-covid-19-pandemic-eligible-emergency-protective-
measures.
• Assistance to state, tribal, territorial, or local governments for
emergency management and to support communications of general
health and safety information to the public.
Question 2: How long will the agencies grant consideration for activities that revitalize or
stabilize COVID-19 designated disaster areas?
Response 2: The March 19, 2020 Joint Statement (“Joint Statement”) 2 indicates that it is
effective through the six-month period after the national emergency
declaration is lifted, unless extended by the agencies. With specific
reference to COVID-19 related revitalization and stabilization activities
needed to help protect public health and safety during the health
emergency, as FEMA has issued the major disaster declarations described
in the Response to Question 1 the agencies believe that a time period of six
months after any particular disaster declaration is lifted is an appropriate
time period for consideration of such activities.
Question 3: How will activities undertaken in response to COVID-19 that are responsive to
community needs be considered in CRA examinations?
Response 3: In light of the declaration of a national emergency, and consistent with the
Joint Statement, the agencies are clarifying that banks will receive
favorable CRA consideration for community development activities that
are responsive to community needs and conducted in response to COVID-
19. Qualifying activities include those that support community services
targeted to low- or moderate-income individuals, economic development
by meeting the “size” and “purpose” tests, affordable housing for low- or
moderate-income individuals or families, or that help to revitalize or
stabilize low- or moderate-income geographies or distressed or
underserved nonmetropolitan middle-income geographies. As described in
the Response to Question 1, qualifying activities also include those that
help to stabilize COVID-19 designated disaster areas by protecting public
health and safety, particularly for low- or moderate-income individuals or
geographies.
Question 4: Can a bank receive consideration for activities related to the COVID-19
emergency and that are conducted on a nationwide basis?
Response 4: The COVID-19 emergency has had a significant health and economic
impact that extends beyond many banks’ assessment areas. Banks that are
responsive to community development needs and opportunities in their
assessment areas will receive favorable consideration for community
2
https://www.federalreserve.gov/supervisionreg/caletters/CA%2020-4%20Attachment.pdf;
https://www.fdic.gov/news/news/financial/2020/fil20019a.pdf; https://occ.gov/news-
issuances/bulletins/2020/bulletin-2020-19.html.
development activities located in a broader statewide or regional area that
includes the banks’ CRA assessment area(s). Banks that are responsive to
needs and opportunities in the broader statewide or regional areas that
include bank assessment areas may also receive consideration for activities
outside those broader statewide or regional areas provided that those
activities help to revitalize or stabilize COVID-19 designated disaster areas
by protecting public health and safety as described in the Response to
Question 1. Activities that benefit low- or moderate-income individuals or
geographies, distressed or underserved nonmetropolitan middle-income
geographies, or small businesses and small farms will be considered
particularly responsive.
Question 5: Are bank loans made under the Paycheck Protection Program (PPP) eligible for
CRA consideration? For PPP loans that are eligible community development
loans, what is the appropriate community development purpose?
Response 5: Generally, loans, including PPP loans, in amounts of $1 million or less to
for-profit businesses, or to nonprofit organizations that are secured by
nonfarm, nonresidential real estate, are reported and considered as small
business loans under the applicable retail lending test. PPP loans will be
considered particularly responsive if made to small businesses with gross
annual revenues of $1 million or less or to businesses located in low-or
moderate-income geographies or distressed or underserved
nonmetropolitan middle-income geographies. Participation in such loan
programs could also receive consideration as innovative or flexible lending
practices.
PPP loans in amounts greater than $1 million may be considered as
community development loans if they also have a primary purpose of
community development as defined under the CRA. Generally, loans to
small businesses with gross annual revenues $1 million or less that create
or retain jobs for low- or moderate-income individuals or in low- or
moderate-income geographies, or that otherwise meet the economic
development “size” and “purpose” tests, qualify as community
development loans. Such loans may also qualify if they help to revitalize
or stabilize low- or moderate-income geographies or distressed or
underserved nonmetropolitan middle-income geographies.
Question 6: How should PPP loans be reported on Call Reports?
Response 6: PPP loans are Small Business Administration (SBA) 7(a) loans. Banks
should follow Call Report requirements for reporting PPP loans based on
the loan type, amount, and collateral, as applicable.
Question 7: For PPP loans reported as small business loans (Type 01), with loan amounts of
$1 million or less, made to an existing bank customer, should a bank report
revenue on the CRA loan register based on what it had previously gathered about
that business? For a new PPP borrower, which has an unknown revenue, may
banks use a revenue estimate and report it as having gross annual revenues of “1”
(gross annual revenues of $1 million or less) or must they use a CRA revenue
code of “3” (unknown/not used in credit decision).
Response 7: Generally, a bank should rely on and report the gross annual revenues that
it considered in making its credit decision. Loans for which the bank did
not collect revenue information may not be included when evaluating a
bank’s performance in lending to businesses and farms with gross annual
revenues of $1 million or less unless the small business or small farm
provides supplemental information or the bank has another source
demonstrating the borrower’s revenue, such as information on existing
customers. Banks that have access to an applicant’s gross annual revenue
information may, but are not required to, report that information. When
evaluating CRA performance, the agencies will take into account the
unique circumstances affecting borrowers and banks resulting from the
COVID-19 emergency and will not penalize a bank for making a large
volume of loans for which gross annual revenue information is not
available. The agencies will also take into account a bank’s good faith
efforts demonstrably designed to support low- and moderate-income
individuals and small businesses and small farms and its efforts to comply
with applicable consumer protection laws.
Question 8: How will PPP loans be considered when evaluating the borrower and geographic
distribution of loans and the distribution of loans inside and outside of bank
assessment areas?
Response 8: PPP loans in amounts of $1 million or less will be considered when
evaluating a bank’s performance under the applicable retail lending test.
This includes the evaluation of performance based on the distribution of
loans inside and outside of its assessment areas, by business size based on
gross annual revenues, and across geographies of different income levels.
The agencies understand that this current environment presents unique
challenges. Therefore, although performance may appear to be negatively
affected, for example by a high level of out-of-assessment area lending,
examiners will consider the information in context and evaluate it
accordingly. That said, banks should continue to seek to meet the credit
needs of their communities if making a significant amount of loans outside
of their assessment areas.
Additionally, an examiner’s review of the borrower distribution of retail
lending is typically focused on activities within a bank’s assessment
area(s). However, as noted in Q&A __.22(b)(2) & (3)—4, 3 a bank may
receive consideration for retail loans to low- or moderate-income
3
See Interagency Questions and Answers Regarding Community Reinvestment, 81 Fed. Reg. 48506 (July 25, 2016).
individuals, small businesses, or small farms outside of their assessment
area(s), provided that they have adequately addressed the needs of
borrowers within their assessment area(s).
Question 9: Are bank loans made under the Main Street Lending Program eligible for CRA
consideration?
Response 9: A bank may receive CRA consideration for Main Street Lending Program
loans that meet relevant CRA requirements. Specifically, small business
loans, including Main Street Lending Program loans, in amounts of $1
million or less to for-profit businesses, or to nonprofit organizations that
are secured by nonfarm, nonresidential real estate, are reported and
considered as small business loans under the applicable CRA retail lending
test. Main Street Lending Program loans will be considered particularly
responsive if made to small businesses with gross annual revenues under
$1 million or to businesses located in low-or moderate-income geographies
or distressed or underserved nonmetropolitan middle-income geographies.
Such loan programs could also receive consideration as innovative or
flexible lending practices.
Main Street Lending Program loans in amounts of greater than $1 million
may be considered as community development loans if they also have a
primary purpose of community development as defined under CRA.
Generally, loans to small businesses with gross annual revenues of less
than $1 million that create or retain jobs for low- or moderate-income
individuals or in low- or moderate-income geographies, or that otherwise
meet the economic development “size” and “purpose” tests, qualify as
community development loans. Such loans may also qualify if they help to
revitalize or stabilize low- or moderate-income geographies or distressed or
underserved nonmetropolitan middle-income geographies.
Question 10: The Joint Statement did not include a reference to affordable housing. Will
examiners consider bank activities that help to maintain affordable housing for
low- or moderate-income individuals, including homeowners or renters, as
responsive to community needs during the COVID-19 emergency?
Response 10: Yes. Community development under CRA includes activities that promote
affordable housing, including single-family and multifamily rental housing,
for low- or moderate-income individuals or families. Activities that
promote housing stability for low- or moderate-income renters who are
experiencing financial hardship due to COVID-19 are considered
particularly responsive to the unique challenges presented by the COVID-
19 emergency. These activities include loan forbearance, reduced
payments, loan modifications, or restructuring debt for residential rental
property owners who in turn agree to offer rent relief to and suspend
evictions for low- or moderate-income renters. 4 In addition, investments
in or grants to intermediary organizations that provide housing support for
low- or moderate-income individuals are considered responsive to
community needs.
Additionally, as the Joint Statement indicates, activities that promote
stability for low- or moderate-income homeowners who are experiencing
financial hardship due to COVID-19 are also considered particularly
responsive to the unique challenges presented by the COVID-19
emergency. These activities include loan forbearance or loan modifications
for low- or moderate-income homeowners. These activities will receive
favorable consideration when retail lending is evaluated. 5
All activities must be undertaken in a manner consistent with safe and
sound banking practices and applicable consumer protection laws.
Question 11: Will job loss or loss of income due to the COVID-19 emergency be considered
when determining whether an individual or family is considered to be low- or
moderate-income?
Response 11: CRA encourages activities that benefit low- or moderate-income
individuals and families. This includes individuals and families who have
recently become low- or moderate- income due to lost jobs, decreased
hours, or furloughs that will reduce income due to the COVID-19
emergency.
Question 12: What retail banking service activities will be considered particularly responsive
to the needs of low- and moderate-income individuals due to the COVID-19
emergency?
Response 12: As the Joint Statement explains, the agencies encourage banks to work
with affected individuals and communities, particularly those that are low-
or moderate-income. Examples of services that are considered particularly
responsive to the needs of low- or moderate-income individuals include
cashing federal government stimulus checks at no cost to non-customers or
waiving late fees and customer overdraft charges.
Question 13: The Joint Statement highlights loans, investments, and services that support
access to health care for low- and moderate-income individuals and communities.
4
Suspension of evictions for tenants would cover instances involving non-payment of rent related to financial
hardship caused by the COVID-19 emergency and instances involving evictions already in process prior to the
emergency.
5
An intermediate small bank that is not a Home Mortgage Disclosure Act reporter would have the option to submit
for consideration home mortgage loans with a primary purpose of providing affordable housing for low- or
moderate-income individuals as a community development activity.
Are there other community services that are particularly responsive to the needs
of low- and moderate-income individuals during the COVID-19 emergency?
Response 13: Examples of community services that are responsive to the needs of low-
and moderate-income individuals due to the COVID-19 emergency include
but are not limited to:
• Childcare for low- or moderate-income essential workers;
• Food banks;
• Shelters or programs for individuals facing homelessness or
domestic violence;
• Alcohol or drug recovery programs; or
• Utility assistance programs.
Question 14: Can banks receive CRA service test consideration for processing PPP or other
pandemic-focused loan applications and related servicing activity? (new FAQ
added March 5, 2021)
Response 14: The CRA regulatory criteria for the service test do not include loan
processing and servicing activities for retail loans originated by a bank. 6
Additionally, the agencies generally consider building new lending
platforms and technical assistance provided to borrowers during a loan
application process to be activities that banks engage in during the normal
course of doing business. Therefore, the agencies will not extend CRA
service test consideration for PPP-related activities.
The agencies do recognize the PPP is responsive to community credit
needs. Therefore, these activities will be considered under the CRA lending
test when evaluating flexible or innovative lending programs offered by the
bank.
Question 15: Should banks report, and should examiners give CRA consideration to, PPP
loans that have been rescinded or returned under the SBA’s safe harbor? (new
FAQ added March 5, 2021)
Response 15: No. Banks should neither report these loans on their CRA loan register nor
will examiners consider the loans in their CRA evaluations of banks during
the applicable time period, as these loans ultimately had no impact on the
relevant business, its employees, or its community.
Question 16: Are PPP loans in amounts greater than $1 million that are also in low- or
moderate-income geographies or in distressed or underserved nonmetropolitan
middle-income geographies automatically considered to be community
development activities? (new FAQ added March 5, 2021)
6
The retail service test criteria include the current distribution of branches, the bank’s record of opening and closing
branches, the availability and effectiveness of alternate systems for delivering retail banking services, and the range
of services provided. See 12 CFR __.24(d) for details.
Response 16: Yes, a PPP loan in amounts greater than $1 million in one of these
geographies will be considered an eligible community development
activity. Pursuant to the Interagency Questions and Answers Regarding
Community Reinvestment, 7 activities that revitalize or stabilize a low- or
moderate-income geography or a distressed or underserved
nonmetropolitan middle-income geography help to attract new, or retain
existing, jobs, businesses, or residents. The PPP was enacted and signed
into law in order to support smaller businesses and retain jobs.
Question 17: Due to the economic distress caused by the COVID-19 pandemic, some banks
have been: (a) waiving withdrawal penalties on certificates of deposit (CDs); (b)
fulfilling early distribution requests regarding individual retirement accounts
(IRAs); (c) allowing draws on home equity lines of credit (HELOCs) during the
repayment periods; (d) increasing transaction limits; (e) eliminating overdraft
fees; and (f) eliminating ATM fees. Will CRA community development service
credit be given for these types of actions during the pandemic? How should
banks document these activities and the number of customers served by
them? (new FAQ added March 5, 2021)
Response 17: The Joint Statement on CRA Consideration for Activities in Response to
COVID-19 (Joint Statement) on March 19, 2020, explains that the agencies
will provide favorable CRA consideration to retail banking services and
retail lending activities in a bank’s assessment area(s) that are responsive to
the needs of low- and moderate-income individuals, small businesses, and
small farms affected by the pandemic and that are consistent with safe and
sound banking practices. The Community Reinvestment Act (CRA)
Consideration for Activities in Response to the Coronavirus Frequently
Asked Questions (FAQs) include additional examples of such activities.
The waiving of ATM fees, overdraft fees, and early withdrawal penalties
on CDs are examples of retail services considered responsive to the needs
of low- and moderate-income individuals as explained in the Joint
Statement. The waiving of a bank’s withdrawal fees on savings accounts is
not included in the Joint Statement or other of these FAQs, but is another
example of a responsive service. Allowing a low- or moderate-income
individual to make draws from a HELOC during the repayment period
could constitute a flexible lending practice. On the other hand, allowing a
low- or moderate-income individual to make a withdrawal from an IRA, as
allowed under the CARES Act, 8 or to draw on a HELOC during the draw
period are routine banking services and, as such, are not eligible for CRA
consideration.
7
See https://www.ffiec.gov/cra/qnadoc.htm.
8
See Coronavirus Aid, Relief, and Economic Security Act (CARES Act), https://www.congress.gov/116/bills/hr748/BILLS-116hr748enr.pdf.
Examiners will consider any relevant information a bank provides that
demonstrates a service is responsive or tailored to the convenience and
needs of its assessment area(s), particularly the convenience and needs of
low- or moderate-income individuals.
Question 18: Considering the challenge of providing in-person community development
services during the COVID-19 pandemic, how will such services provided
virtually by bank representatives be considered for CRA purposes? (new FAQ
added March 5, 2021)
Response 18: Historically, for CRA purposes, bank representatives have primarily
provided community development services in-person. However, the
agencies recognize that the COVID-19 pandemic has limited banks’ ability
to continue doing so. As an alternative to in-person services, the agencies
will consider services provided virtually (e.g., Zoom, Microsoft Teams,
WebEx, etc.) by bank representatives that have a primary purpose of
community development and that are related to the provision of financial
services. Examples of community development services provided virtually
could include, but are not limited to, financial literacy programs or first-
time homebuyer education sessions targeted to low- and moderate-income
individuals and small business or small farm technical assistance sessions.
Community development services provided virtually are qualified
individually, by each event conducted and in consideration of the
assessment area(s) benefitted. Therefore, if a bank representative conducts
a financial counseling session to help people affected by COVID-19
virtually for primarily low- and moderate-income individuals in a single
assessment area, the bank will receive credit for one community
development service for the assessment area. Of note, a community
development service provided virtually that reaches multiple assessment
areas should be considered at either the state or institution level. For
example, if a bank representative conducts a small business technical
assistance session that is virtually attended by businesses nationwide, the
community development service will be considered at the institution level.
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