California Banker May/June 2023

Can a single loan be reported on both the HMDA and CRA LAR in a given year? Q: ASK THE COMPLIANCE GURU

ment loan as well as a home mort gage loan).” https://www.ffiec.gov/cra/ pdf/2015_CRA_Guide.pdf “A loan of $1 million or less with a business purpose that is secured by a one-to-four family residence is con sidered a small business loan for CRA purposes only if the security interest in the residential property was taken as an abundance of caution and where the terms have not been made more favor able than they would have been in the absence of the lien. (See Call Report Glossary definition of “Loan Secured by Real Estate.”) If this same loan is refinanced and the new loan is also se cured by a one-to-four family residence, but only through an abundance of cau tion, this loan is reported not only as a refinancing under HMDA, but also as a small business loan under CRA. (Note that small farm loans are simi larly treated.)” https://www.federalregister.gov/ d/2016-16693/p-451c Q: If a customer calls and asks about our current deposit rates do we need to include a statement of “annual percent age yield” along with the rate? A: In any oral response to a consumer inquiry on deposit rates, Regulation DD requires that you state the annual percentage yield. The interest rate may be stated in addition to the annual per centage yield as set out here: “(e) Oral response to inquiries. In an oral response to a consumer’s inquiry about interest rates payable on its ac counts, the depository institution shall

state the annual percentage yield. The interest rate may be stated in addition to the annual percentage yield. No oth er rate may be stated.” https://www.consumerfinance.gov/ policy-compliance/rulemaking/ regulations/1030/3/#e Q: If we obtain new information on a Regulation E dispute indicating that the transaction was authorized after the bank concluded its investigation and is sued final credit, can we reopen the in vestigation and reverse the credit? A: Regulation E, unfortunately, does not contemplate reversing a final credit, even if new information comes to light after the disposition of the investiga tion. https://www.consumerfinance. gov/policy-compliance/rulemaking/ regulations/1005/11/#11-c-Interp-4 If the bank has already communicated to the consumer that the “final credit has been made” (or similar), then at tempting to reverse a final credit could invite increased regulatory scrutiny during an exam and/or audit since Reg E simply does not authorize this action. Some make the interpretation that the consumer shouldn’t get a windfall and would reverse the final credit provided by the bank. However, there’s noth ing that expressly allows this in the regulation and it’s highly questionable whether reversing credit outside of the timing requirements set out in Reg. E would be acceptable. As such, it would be most conservative to not reverse the final credit since Reg E does not specifi cally allow for it.

A: It depends. Generally, loans cannot be double counted for HMDA and CRA purposes. However, multifam ily affordable housing loans may be reported both under HMDA as home mortgage loans and as Community De velopment loans. Also, the refinance of a loan to a business where a residence is taken as collateral could be reported both under HMDA and as a Small Business or Small Farm loan. “Except for multifamily affordable housing loans, which may be reported by retail institutions both under HMDA as home mortgage loans and as com munity development loans, in order to avoid double counting, retail institu tions must report loans that meet the definition of “home mortgage loan,” “small business loan,” or “small farm loan” only in those respective catego ries even if they also meet the definition of “community development loan.”” https://www.ffiec.gov/cra/pdf/2015_ CRA_Guide.pdf “If an institution is not a wholesale or limited-purpose institution, it cannot designate a loan as a community de velopment loan if the loan has already been reported or collected by the in stitution or an affiliate as a small busi ness, small farm, consumer, or home mortgage loan (except in the case of a multifamily dwelling loan, which may be considered a community develop References:

16 www.CalBankers.com | CaliforniaBanker