The bank is currently receiving and CRA review from the OCC. The bank has a loan that it counted as a community development loan because it qualified as affordable housing. Although the loan was within the bank’s MSA, it is across state lines and outside of their assessment area. The OCC is saying the bank cannot count this loan as it is out of state. If there any guidance to the contrary?
There is not a complete ban on counting loans outside the bank’s state and assessment area as a community development loan; however, the bank does need to demonstrate the loan somehow “addresses the needs” of the bank’s assessment area.
See 12 CFR §25.25(e)(2): "Benefit outside assessment area(s). The OCC considers the qualified investments, community development loans, and community development services that benefit areas outside the bank's assessment area(s), if the bank has adequately addressed the needs of its assessment area(s)."
So for example, if you make an affordable housing loan to a borrower in a town in another state that is outside your assessment area and that is located in an isolated mountain pass, you're probably not going to be able to demonstrate it's a valid community development loan. If, however, the loan is to a borrower in a mainly residential town where all the town's residents commute to work in and shop at a town within your assessment area, you would have a much better case.
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