#61: Community Development Loans Demystified

CRA Podcast Episode 16: Community Development Loans Demystifiedwith Krista Shonk, VP & Senior Counsel, Regulatory Compliance and Policy, Fair & Responsible Banking, ABAAre you one of the 95 percent of banks that are underreporting community development loans under the Community Reinvestment Act (CRA)? This episode debunks the myths around how to recognize community development loans at the time of loan origination and how to avoid expensive loan mining activities at the tail end of your compliance processes.Community development loans are the most heavily weighted aspect of the CRA, and when you understate your community development loans you are compromising your bank's lending performance. As you know, if you don’t meet the credit needs of your communities, it can lead to public relations risks that could even result in an internal “needs to improve” rating or hamper your ability to adjust your bank’s strategy priorities.ABA’s Krista Shonk interviews Linda Ezuka of CRA Today in this focused episode on the most subjective aspect of the CRA. Identifying community development loans requires many internal stakeholders within the bank and this episode highlights a solid approach to engage commercial lenders in identifying loans that are hidden within their portfolios and their loan pipelines. Most lenders are focusing on meeting the credit needs of their commercial clients and overlook common community development loans due to a lack of understanding of the CRA. The key to engaging commercial loan officers is to conduct community development loan training. Use this training to highlight the community development "hooks" or pillars to determine if their loans meet the primary purpose test.Ongoing micro-training moments are key to keep community development loans top of mind thereafter.Enjoy this episode that breaks down strategies to identify community development loans at origination and how to avoid underreporting these important loans. If you want to take a deeper dive into this work to learn how to increase your community development loan portfolios, consider our community development loan workshop of customized bank training for commercial loans officers. See below for more information. Links: Customized Bank Training: https://cratoday.com/cra-training/ Check out our website to take the next step in your CRA journey today: www.cratoday.com Copyright © 2022 by CRA Today LLC(No claim to original U.S. government material)All rights reserved. No part of this podcast may be reproduced, stored in a retrieval system, or transmitted in any form or by any means, including electronic, mechanical, photocopying, recording, or otherwise, without prior written permission of the author and publisher.This podcast is a periodic publication of CRA Today LLC and is intended to notify and inspire recipients of new developments in the Community Reinvestment Act. It should not be construed as legal advice or legal opinion on any specific facts or circumstances. The contents are intended for general informational purposes only, and you are urged to consult your own attorney concerning your situation and specific legal questions you have.