Sampling and Resubmission of CRA Data - Community Reinvestment Act
←
→
Page content transcription
If your browser does not render page correctly, please read the page content below
Community Reinvestment Act
Sampling and Resubmission of CRA Data
In August 2001, the Board adopted a uniform CRA data-resubmission policy (see the ‘‘Data-
policy for the sampling and resubmission of data Resubmission Standards’’ section of this chapter)
collected and maintained by state member banks, to the entire sample, if necessary.
in accordance with Regulation BB. Although the
If, however, in a universe of 150 files, the
sampling approach and data-resubmission policy
examiner finds 6 or more files that have an error or
are similar to those used for the verification and
errors in key fields during the initial file review, the
resubmission of data required to be reported under
examiner should stop after completing a review of
the Home Mortgage Disclosure Act,1 there are two
the initial 29 files. In this case, the findings based
differences. First, the key fields are different.2
on the initial files reviewed would constitute suffi-
Second, examiners will need to verify the accuracy
cient statistical evidence to conclude that a larger
of the CRA data aggregation for those banks that
sample would have an unacceptable error rate,
do not use the FFIEC data entry software for editing
thus requiring resubmission. At this point, the
and reporting small business and small farm loan
examiner should apply the CRA data-resubmission
data.
standards to the total sample.
As with the HMDA sampling procedures, the
After analyzing the errors found during the
approach outlined in the ‘‘Data-Integrity Sampling
sampling process, examiners may choose to
Procedures’’ section of this chapter and illustrated
perform supplemental targeted random sampling.
by the ‘‘CRA Sampling Schedule’’ employs a
For example, after completing a review of a CRA
two-tier sampling method that allows examiners in
sample, an examiner may discover that CRA data
certain scenarios to stop their file review after a
errors appear to be coming from one particular
minimal number of files have been reviewed. For
loan decision center or are most prevalent in a
example, if the institution reported data for 150 loan
particular product type. The examiner might decide
files, the total number of files that should be
to select a supplemental random sample of loan
randomly sampled during the exam is 56. The
records specifically tied to that loan decision center
policy, however, allows examiners to review a
or loan product. In these instances, supplemental
smaller number of loans initially and subsequently
samples should follow the same sampling process
decrease the sample size, provided that no more
as the original sample, utilizing the two-tier
than 1 file in the initial sample contains errors in any
approach found in the CRA sampling schedule.
key field.
The statistical validity of this approach relies upon
For example, as noted in the CRA sampling review of a random sample from the data main-
schedule, for a universe of 150 files, the initial tained at each bank, as well as on a review of
review would encompass 29 files. If, after complet- information year by year (separate universes) and
ing the review of these 29 files, the examiner noted not combined into one universe.
no more than one error in any key field for these
The following sections, ‘‘Data-Integrity Sampling
files, the examiner should stop the file review. No
Procedures,’’ ‘‘CRA Sampling Schedule for Data
additional files should be reviewed.
Accuracy,’’ and ‘‘Data-Resubmission Standards,’’
However, if the examiner finds that between 2 are based on attachments I, II, and III, respectively,
and 5 files have one or more errors in key fields, the to CA 00-2.
examiner must continue reviewing the 27 additional
files, for a total sample size of 56 files. After
completing the review of the total sample of 56 files,
the examiner should determine the total number of Data-Integrity Sampling Procedures
files that have key-field errors and apply the new
The following CRA data-integrity sampling proce-
dures should be applied when reviewing data
1. These procedures are outlined in CA 00-2 and in the collected and maintained by state member banks,
‘‘Data-Integrity Sampling Procedures’’ section of this chapter.
2. Key fields for CRA are in accordance with the data collection, reporting,
• For small business and small farm loans: the loan amount at and disclosure requirements of Regulation BB:
origination, the loan location (MSA, state, county, census tract),
and an indicator whether the loan was to a business or farm with 1. Identify and select the loan files to be reviewed.
gross annual revenues of $1 million or less;
• For community development loans: the loan amount at
For each CRA reporter, review applicable loan
origination or purchase and an accurate community develop- data for the current year and all other years
ment purpose, as documented in supporting loan files; and since the last examination. The data collected
• For consumer loans collected and maintained at the bank’s
option: the loan amount at origination or purchase, the loan and maintained for a single year constitute the
location, and the gross annual income of the borrower. universe from which a sample is taken. As a
Consumer Compliance Handbook CRA • 83 (11/14)Sampling and Resubmission of CRA Data
result, it may be necessary to select multiple For example, if a CRA universe contains 150
samples. files, a total random sample of 56 files should
2. Determine the total number of files to be be taken. The examiner may initially begin file
sampled from column G in the ‘‘CRA Sampling review on 29 files. If, upon completing review
Schedule for Data Accuracy’’ table, based on of the initial 29 files, the examiner finds 4 files
the size of the universe. (This table, which will be with an error (or errors) in key fields, the
referred to as the schedule, can be found in the examiner should then review 27 additional
next section of this chapter.) files, for a total sample size of 56 files. After
3. Select the total random sample. (Instructions for completing review of the additional 27 files, the
selecting a random sample are contained in examiner should determine the total number of
attachment 1 to CA 00-2.) files that have key-field errors and apply the
4. Review the initial number of files shown in CRA data-resubmission standards to the total
column B of the schedule. sample. (See the ‘‘Data Resubmission Stan-
5. The examiner may stop the sampling process dards’’ section of this chapter.)
after review of the initial number of files is 7. If an examiner determines that a large number
completed, if the results indicate that a very of files reviewed in the initial file review have an
small number of files had errors in key fields. error or errors in key fields, the examiner may
(See footnote 2 for a description of the key stop the verification of loan data after the initial
fields.) Using the schedule, this number can be file review is completed and should apply the
determined by referencing column C. data-resubmission standards. This maximum
For example, if a CRA universe contains 150 number can be determined by using the
files, a total random sample of 56 files should be schedule and referencing column E. For
taken. The examiner may initially begin file example, if a CRA universe contains 150 files, a
review on 29 files. If, upon completing review of total random sample of 56 files should be taken.
the initial 29 files, the examiner finds no more The examiner may initially begin file review on
than 1 file with any error or errors in key fields, 29 files. If, upon completing review of the initial
the examiner may end the sampling process for 29 files, the examiner finds 6 (or more) files that
that CRA reporter for that universe. The exam- have an error or errors in key fields, the
iner may then reach a statistically reliable examiner should stop the file review. Sufficient
conclusion that the findings are indicative of the statistical evidence has been obtained to con-
universe and resubmission3 is not necessary. clude that a larger sample would have an
6. The examiner must complete a review of the unacceptable number of errors, thus requiring
total random sample of files if a larger number resubmission. At this point, the examiner should
of files with errors in key fields are found apply the CRA data-resubmission standards to
during the initial file review. The need for this the total sample.
additional file review can be determined by 8. Determine the software used by the bank for
using the schedule and referencing column D editing and reporting small business and small
titled ‘‘Number of files with errors—Additional farm loan data. If the bank uses the FFIEC data
file review required.’’ If the number of files that entry software for editing and reporting small
have errors in key fields from the initial review business and small farm loan data, no further
falls within the number reflected in this column, review is needed. If the bank does not use the
the examiner must review the additional files to FFIEC software, verify the accuracy of the CRA
complete the total random sample. data aggregation.
3. For consumer loan data, the decision would not be whether
to require resubmission but if the data collected and maintained
are used as part of the CRA examination. If a bank elects to have
consumer lending data considered during its CRA examination,
the data must meet these accuracy standards. If consumer
lending constitutes a substantial majority of a bank’s business, the
examiner should evaluate the bank’s consumer lending in one or
more of the categories specified in section 228.12(k) of Regula-
tion BB (motor vehicle loan, credit card loan, home equity loan,
other secured consumer loan, or other unsecured consumer loan)
using loan files sampled by the examiner.
84 (11/14) • CRA Consumer Compliance HandbookSampling and Resubmission of CRA Data
CRA Sampling Schedule for Data Accuracy
A B C D E F G
INITIAL FILE REVIEW
CRA Initial Maximum Number of Minimum ADDITIONAL TOTAL
UNIVERSE file number of files with number of FILE RANDOM
review files with errors*— files with REVIEW SAMPLE
errors*— Additional errors*—
Stop file review Stop sampling
sampling required & apply
(go to column F) resubmission
standards
1-12 Review
all
12-20 12 0 1 2 Review all All
21-30 13 0 1 2 Review all All
31-50 15 0 1-2 3 13 28
51-70 17 0 1-2 3 12 29
71-90 18 0 1-3 4 20 38
91-110 28 1 2-3 4 11 39
111-130 29 1 2-4 5 18 47
131-140 29 1 2-4 5 20 49
141-170 29 1 2-5 6 27 56
171-190 30 1 2-5 6 27 57
191-270 30 1 2-5 6 29 59
271-380 30 1 2-6 7 38 68
381-750 31 1 2-6 7 38 69
751-1100 31 1 2-7 8 48 79
1101- 32 1 2-7 8 47 79
*Files with one or more errors in key fields. See footnote 2 for a description of the key fields.
Data-Resubmission Standards Institutions are required to correct the aggregate
number and aggregate amount of community
To ensure the integrity of the CRA data used for development loans originated or purchased if data
analysis, the following guidelines should be used for 5.0 percent or more of the number or amount of
when considering whether to have an institution the underlying loans do not meet the definition of
resubmit CRA data. community development.
Institutions should be required to correct and Rounding errors in the loan amount and income
resubmit CRA small business and small farm data fields should not be counted towards resubmis-
when at least 5.0 percent of the data collected and sion.
maintained in accordance with section 42(a) of
Regulation BB were recorded incorrectly. The key In addition to basing a resubmission on the error
fields covered by this 5.0 percent rule are rate for an individual field, if at least 10.0 percent of
the institution’s records have an error in at least one
• The loan amount at origination, of the key fields, then the entire CRA file must be
• The loan location (MSA, state, county, census resubmitted. In this instance, the institution must
tract), and verify the data in each of the fields and not just
• An indicator whether the loan was to a business those with greater than a 5.0 percent error rate.
or farm with gross annual revenues of $1 million
or less.
Consumer Compliance Handbook CRA • 85 (11/14)Community Reinvestment Act
Community Contact Procedures
General Guidelines Treatment of Confidential Information
The primary objectives of conducting interviews Confidentiality of Institution’s Records
with local community contacts are to
Examiners must maintain the confidentiality of any
• Gather information that might assist in the institution’s proprietary information. When making
development of a community profile; community contacts, the examiner should not
• Determine opportunities for participation by reveal any confidential information obtained from
financial institutions in helping to meet local the institution’s files or through discussions with
credit needs; management, or any conclusions drawn about the
• Understand perceptions on the performance of institution’s performance or CRA rating.
financial institutions in helping meet local credit
needs; and
Protection of Community Contacts
• Provide a context on the community to assist in
the evaluation of an institution’s CRA perfor- Maintaining the confidentiality of the community
mance. contact’s identity, when requested to do so, is
essential. Examiners must not reveal the name or
This section provides information and procedures other identifying information about a community
for conducting community contact interviews. It contact to anyone outside the agency without the
broadly addresses a wide variety of subjects to contact’s permission to do so.
accommodate varying communities and types of
institutions. As a result, it is not meant to be used in
the order presented. Examiners should select Report of Examination and CRA
those steps and procedures that apply to the Performance Evaluation
unique circumstances of the institution and/or the
community. Include in the Report of Examination and the CRA
Performance Evaluation, as appropriate, a discus-
sion of the number and kinds of CRA-related
community contacts that were consulted and
Coverage and Frequency of relevant information obtained and used, if any, in
Community Contacts the CRA evaluation. Information should be factual.
While opinions of contacts may be included when
Community contacts typically take the form of applicable, examiners should refrain from drawing
personal meetings. Telephone conversations or conclusions or making judgments based solely on
larger group meetings are permitted as necessary anecdotal evidence.
and appropriate. Information from other financial
regulatory agencies is also available in electronic
form. At least in conjunction with each examination,
Sharing Information
the [agency] will conduct community contacts in The agencies routinely share information obtained
the MSA, county, or assessment area(s) that the during outreach contacts. Whenever community
financial institution in question is serving. When contacts are made, the examiner initiating the
possible, those community contacts should be contact should complete the Community Contact
conducted early in the examination to help to Form and submit it to the party designated within
provide a context on the community to assist in the each agency. The designee will distribute copies of
evaluation of performance. the form to their counterparts at the other regulatory
agencies.
Selection of Community Contacts Preparation for the Interview
The number and nature of contacts will depend Before conducting interviews, review relevant back-
upon a variety of factors, including the complexity ground information to identify additional areas of
of the community, the size and type of the inquiry. Adequate preparation for the interviews
institution examined, and the amount and age of includes reviewing information on the assessment
community-driven information already available to area, selecting community contacts, and structur-
the examiner. ing the interview.
Consumer Compliance Handbook CRA • 87 (11/14)Community Contact Procedures
Review of Information on Assessment Quantitative sources may include feasibility
studies, market analysis, or commercial ap-
Area
praisal reports for local development projects.
A review of all available background materials State or local economic development agencies,
prior to the community contact process is vital in utility companies, real estate organizations, and
developing a working understanding of the universities present in the immediate or surround-
community you are about to enter. The nature, ing area are often good sources for such
extent, and age of the information available prior material. Section II, ‘‘Identification of Potential
to conducting community contacts influences your Contacts,’’ contains additional potential sources
objectives for the community contact process. A for these types of material.
well-developed context also allows for more • Determine the priorities of the community and the
detailed and in-depth community contact inter- opportunities for financial institutions to partici-
views. The examiner should pate with local governmental and nonprofit
organizations in the areas of affordable housing,
• Assess prevailing economic conditions and
small business/farm development, and eco-
demographic characteristics within and near the
nomic and community development. Review the
assessment area. This includes a review of
number and nature of government agencies,
available data on various population segments
nonprofit, and neighborhood organizations that
within the community, trends in migration, labor
provide programs and resources to the assess-
and employment characteristics, comparisons to
ment area for these purposes. If possible, note
state and county/MSA data, and housing and
the amount of funds devoted to these purposes.
real estate market statistics.
Also, attempt to determine which programs or
• Assess infrastructural and geographic character-
organizations are particularly active with respect
istics within the assessment area. This includes a
to the low-income individuals and/or areas
review of maps; natural areas; major thorough-
located in the assessment area.
fares; access to public transportation; locations
Sources of information for this step include
of low- and moderate-income census tracts;
prior community contacts in this area, informa-
names of specific low- and moderate-income
tion on local programs from the institution, and
neighborhoods; and proximity of the assessment
discussions with appropriate agency staff.
area to military bases, airport facilities, and
metropolitan centers. Internal mapping software; • Based upon information reviewed, above, iden-
information from the financial institution; and tify areas that require further inquiry through the
information from local planning, transportation, community contacts process. For example
economic development, or real estate boards a. Are there any significant conflicting pieces of
are good sources for possible information. information that may require further investiga-
• Assess distribution and availability of branch tion in the contact interviews?
and ATM services, especially with regard to
low-income areas within the community. Include b. Are there any pieces of quantitative informa-
a review of check-cashing facilities, if possible. tion, such as housing and rental values, that
Internal mapping software, if available, can allow are considerably outdated and need to be
the examiner to map these locations. verified in the contact interviews?
• Assess, to the extent information is available, c. Do the data suggest particular areas of
local development issues and priorities in the ‘‘need’’ in affordable housing, such as hous-
areas of affordable housing, commercial ing rehabilitation, multifamily development, or
activity, and economic and community single-family home purchase, that you can
development. investigate further and verify through the
A summary of such information may be contact interviews? Or alternatively, are needs
available from the Community Affairs function. for specific areas of the population, such as
In addition, the examiner may wish to review housing for the elderly, still unclear and
previous community contacts for this locality, therefore require further study through the
including those from other regulatory agencies. contact interviews?
If the examiner is reviewing an MSA, he or she
d. Do the data suggest particular areas of need
should contact the city’s municipality and
in services, such as ATMs, branches, or
obtain a copy of its Consolidated Plan (Con-
bilingual services, that can be investigated
plans). Conplans list the needs of an MSA as
further and verified through the contact
identified and prioritized by its officials. The
interviews?
examiner may also consider obtaining public
reports from multiple listings services (MLS) e. Does the review identify organizations or
and news articles on local development projects. projects requiring additional information?
88 (11/14) • CRA Consumer Compliance HandbookCommunity Contact Procedures
Identification of Potential Community • Input from low-income residents is clearly sought
in functional/program aspects and information
Contacts distribution to low-income individuals is a priority.
This section discusses the number of types of Examples of this include door-to-door surveys
community contacts that should be made during an and frequent neighborhood meetings.
examination. It also identifies potential community • Low-income individuals are encouraged or
contacts and provides guidance on the sources of empowered to solve problems collectively.
information that are available from them.
Types of organizations: Churches, block clubs,
tenants associations, low-income advocacy groups,
Number and Type of Contacts housing or credit counseling programs, senior
Select contacts that can best provide information citizen groups, shelter providers, health clinics,
on the assessment area(s). Consider the nature of and community network/collaborative groups.
the information you are seeking to complete your Types of information available: Development
analysis of the assessment area(s) and the pur- priorities and concerns of the local low-income
pose of the organizations in the assessment populations; available development programs and
area(s). Examiners may wish to initially consult or resources; current partnerships and/or develop-
select organizations on the telephone to determine ment projects in the area; and the role of financial
which can best comment on particular issues. institutions in the assessment area.
Time constraints can limit the number of contacts Secondary information: Completed questionnaires
that the examiner is able to conduct. The following or surveys.
factors may be considered when determining the
appropriate number of contacts to make:
• The nature of any information provided by the 2. Community-Based Development or
institution, including information that specifies Financial Intermediaries
credit, service, or community development needs The primary aim of these organizations is typically
in the institution’s assessment area to increase the economic standard of low-income
• The nature of public comments, including infor- individuals or areas. Thus, they tend to be involved
mation that specifies credit, service, or commu- in technical aspects of development, such as
nity development needs in the institution’s assess- residential and commercial real estate ventures or
ment area financing. Though these groups encourage repre-
sentation of low-income individuals, they are also
• The amount of community contact information likely to have a higher degree of staff or decision-
available from other examinations conducted for makers who live outside of the low-income areas
this area, both in number and substance, and the that the organization is serving.
date the information was gathered
Types of organizations: Nonprofit organizations,
• The complexity of the community, including the
such as community development corporations
size of its population, its geographic breadth,
(CDCs); church-based economic development pro-
and the diversity of its population
grams; community loan funds; small business
• The characteristics of the institution examined investment corporations (SBICs); specialized small
business investment corporations (SSBICs); low-
income housing organizations; technical assis-
Organization Types tance providers, low-income credit unions; devel-
1. Grassroots Community Groups opment institutions; and micro-enterprise groups.
Grassroots groups are formed when concerned Types of information available: Low-income credit,
individuals come together to solve common prob- service, and community development issues at the
lems. Groups whose primary aim is to further the neighborhood level; quantitative information on
objectives of low-income residents are of particular housing values and actual real estate projects;
interest. These groups can be difficult to identify qualitative information on financial institutions and
because they tend to be smaller neighborhood financial practices of low-income individuals; tech-
groups and may not have readily recognizable nical details on financing and lending mechanisms
names. However, they will often share the following for programs they offer; and information on other
characteristics: government and program resources or ventures in
the community.
• Low-income representation is evident in policy
and implementation aspects of organization. Secondary information: Feasibility studies, appraisal
This may be evident at the board level, in the information on specific neighborhoods, local
committee structure, or in the day-to-day management. needs assessments, surveys of institutions’ activ-
Consumer Compliance Handbook CRA • 89 (11/14)Community Contact Procedures
ity, surveys of financial practices of low-income information on the makeup of their student body.
clientele, and lending agreements by groups of This information is typically collected annually.
local financial institutions.
4. Business and Labor Groups
3. Government Offices
Types of organizations: Chambers of commerce,
Types of organizations: downtown and neighborhood merchants associa-
• Local branches of federal agencies, such as the tions, small and minority business advocacy groups,
Department of Housing and Development (HUD), realtors, minority and nonminority real estate agents,
Small Business Administration (SBA), Depart- local venture capital companies, SBA/college-
ment of Commerce Economic Development Ad- supported small business development centers
ministration (EDA), Farmers Home Administration (SBDCs), feed stores, cattlemen’s associations,
(FmHA), Bureau of Indian Affairs (BIA), and U.S. actual small business owners, and small business
Department of Agriculture (USDA) technical assistance providers (such as business
incubators and local union representatives).
• Local groups of federally funded or mandated
programs: community action agencies (CAAs), Types of information available: Data and perspec-
neighborhood revitalization programs, and Office tives on local business, economic conditions,
of Minority Business Enterprise (OMBE) business recent economic activity, and trends in the commu-
development centers nity; the nature and extent of small business
activity; the level of referrals from financial institu-
• Local elected officials: mayors, commissioners,
tions to SBDCs; the existence of active SBA 504
tribal chiefs, city council members, and tribal
programs, or SBIC or SSBIC programs; perspec-
council members
tives on financial institution efforts to provide
• State and local housing agencies or authorities financing and services to small businesses/small
• Economic development agencies, including farms; the level of institution participation in other
industrial and redevelopment agencies or authori- public/private programs for small business devel-
ties, county or regional planning agencies, trans- opment and employment training; and other private
portation agencies, utility companies, rural elec- and public sources of financing available for small
tric cooperatives, economic development businesses and small farms in the assessment
corporations (EDCs), and local planning or area.
economic development directors Secondary information available: Mortgage interest
• School board superintendent and officials rate sheets from financial institutions or mortgage
companies obtained from realtors.
Types of information available: Types of loan, grant,
guarantee, or other programs available for use by
institutions and housing, community, and economic 5. Civil Rights and Consumer Protection
development groups; the amount of funding avail- Groups
able through such programs in the institution’s
Types of organizations: Open housing/fair housing
assessment area(s); the extent to which local
organizations; local chapters of the National Asso-
financial institutions participate in such programs
ciation for the Advancement of Colored People
and perspectives on barriers or issues related to
(NAACP), Urban League, Urban Coalition, and
their participation; specific project opportunities in
National Organization of Women (NOW); legal
which institutions could participate; and information
aid/legal services offices; human relations commis-
on underserved neighborhoods or areas.
sions; and state attorney general or consumer
Secondary information available: Housing, small protection offices.
business, agriculture, and general economic con-
Types of information available: Credit needs,
ditions and trends in the assessment area; publicly
issues, or priorities for any protected classes;
sponsored comprehensive or general development
complaints against specific financial institutions;
and redevelopment plans and maps; other plans
and general perspectives on financial institutions in
and studies, such as housing plans (e.g., the
the assessment area.
Consolidated Plan), economic development plans,
and studies; and various community service needs Secondary information available: Studies using
in the assessment area. School boards can update testers in financial institutions, formal complaints, or
census information by providing demographic case write-ups.
90 (11/14) • CRA Consumer Compliance HandbookCommunity Contact Procedures
6. Other c. Whom does the organization represent? Roughly
what percentage of your client base is very low-
Types of organizations: Universities, research insti-
(defined as 25–50 percent of median area
tutions, foundations, and hospitals or hospital
income), low-, moderate- or middle-income?
extension programs.
d. What are the mission and the primary goals of
Types of information available: Many and varied. this organization? What are the goals for this
Specific community projects by universities or year?
hospitals may be involved.
e. Is there a board of directors? What is the
Secondary information available: Demographic and representation on the board? Are there low-
economic data; independent research studies or income neighborhood residents on the board?
reports on community development topics; and Are banks/lenders or other financial institutions
studies and data collection on development and on the board?
economic trends or opportunities in the area.
Automated ‘‘Conplans’’ may also be available. f. What projects or programs are you currently
working on? Aside from programs, are there
other means in which the mission is carried out?
Conducting the Interview g. How many ‘‘clients’’ does this organization
serve on a monthly or annual basis? If the
Having determined the groups and/or individuals to
organization is involved in development, how
be contacted and the information to be solicited
many real estate projects have been completed
from each interview, the examiner must then plan
in the organization’s history? How many are
the structure and content of questions prior to the
ongoing?
interview. This section provides a sample list of
questions that the examiner may wish to consider. h. If direct loans have been provided through any
The examiner should select and tailor questions programs, what type of loans are they? What
from the list of sample questions that would be the segments of the community have benefited
most effective for each specific contact. from these loans (low-, very low-, or moderate-
income; the elderly; etc.)? What is the number
The questions highlight the type of information
and dollar volume of loans generated?
that the examiner is seeking through the community
contact process. They are meant to serve as a i. What are the amounts and sources of the
guide to assist the examiner in planning the organization’s funding? How is the funding
substance and structure of the interview. Obvi- disbursed (i.e., what activities does it fund and
ously, not all questions will be appropriate to each how much of the budget is devoted to each
specific contact. Nor is the list all-inclusive; particu- activity)?
lar questions may generate significant discussions j. Could you list the organization’s major accom-
and examiners are expected to probe and conduct plishments in the past five years? Is there such
follow-up questions appropriately. Examiners are a list that you may have for purposes of your
encouraged to review the entire list before structur- funders or funding proposals that I may have a
ing their interview. As examiners gain experience, copy of?
they are encouraged to engage in discussion with
the community contact and not undertake a k. What are some of the limits the organization is
‘‘question and answer’’ format. facing in serving its community? In what areas
is it currently encountering opportunity?
l. Is the organization interested in expanding its
Background Information on Community program or project areas at this time? In what
Contact area? Is there a timeline in place to implement
The examiner should ascertain the organization’s these activities or expected to be in place?
area of expertise and the role that it plays in the
community.
Specific to Economic Development Agencies
(Including Utility Companies):
General: a. Are there empowerment zones (EZs), enter-
a. What geographic areas does the organization prise communities (ECs), or foreign trade zones
serve? (FTZs) in your area? Where? What types of
b. How old is the organization? How was it monetary incentives are offered?
started? How much involvement by local resi- b. What are examples of small business, small
dents and/or low-income residents was there farm, and community-based development that
initially? the agency has been involved in? Has activity
Consumer Compliance Handbook CRA • 91 (11/14)Community Contact Procedures
been concentrated in a few areas? Which ones? process is to update the community profile. The
c. Does the economic development agency also examiner is expected to obtain and update infor-
coordinate the housing program and monies for mation on current economic conditions and trends,
this jurisdiction? If not, is economic develop- current demographic characteristics, and existing
ment coordinated with housing officials? What credit needs.
priority is accorded to affordable housing?
What priorities, if any, are accorded to specific General:
population segments (e.g., elderly, special
a. What is the current demographic makeup of the
assistance, female heads of households, home-
community? What were the most significant
less, other)?
demographics changes in the past five to ten
d. Are the economic development strategies or years, if any (e.g., migration patterns, racial
the availability of the programs communicated composition)?
to local residents in any way? How? [Note to
b. Which neighborhoods are in transition, if any?
examiner: Did you find that local residents or
Has gentrification or the displacement of low- or
community representatives were able to articu-
moderate-income individuals become an issue
late strategies or various programs?]
in certain neighborhoods? In which neighbor-
e. Does the agency have working relationships hoods? Is the potential displacement of individu-
established with community organizations at als being managed in some process, for
the neighborhood level? Who? What are the example, a relocation package? If so, how and
names of the individuals that the agency has who is involved?
worked with? If so, what is the extent of the
c. What major employers have either entered or
partnership that has been established?
left the community in the last few years? Has
this impacted certain categories of the labor
Specific to Local Government: market and not others? If so, who was positively
impacted? Negatively? How?
a. What is the structure of the local government?
Is there an economic development depart- d. Who or what organizations are the driving
ment? Is this separate from housing development? forces in the community (examples include
churches, government, community groups,
b. Which department has responsibility for eco-
etc.)?
nomic development policy?
e. What priorities have you identified for this area?
c. Does the local government have programs
that target affordable housing, small business f. Have you conducted any studies (e.g., neigh-
development, and/or community development borhood surveys or feasibility studies) that may
projects? How much funding do they have? provide insight into local credit, service, or
community development needs? What were the
d. Has the local government identified priorities for
results? (Obtain a copy, if available.) How was
its housing and economic development funds?
the study used and what was the distribution
Has the government determined what impact
(any banks included)?
this will have for the population (e.g., for the
elderly, low-income families, individuals with g. Do zoning restrictions play a role in the
special needs, the homeless)? To the agency’s availability of affordable housing units? How?
knowledge, what has been the impact of its Which neighborhoods are most impacted?
funds in the last several years? h. Are absentee landlords a problem? For whom?
e. How much money has been allocated for In which neighborhoods?
affordable housing, elderly needs, special i. In your opinion, what credit needs have not
needs, etc.? What is the time frame for the been adequately satisfied by area financial
disbursement of funds, particularly CDBG institutions? (Give example: small business
funds? loans, home improvement loans, installment
loans, etc.)
Specific to Real Estate Brokers: j. To what extent are financial services available
a. Do you have brokers who specialize in low- or in the assessment area? What is the availability
moderate-income housing (single or multifamily)? of ATMs or branches in this neighborhood?
k. Are there many women- or minority-owned
businesses in the area? If so, are they concen-
Obtaining a Community Profile
trated in any geographic location or occupa-
One of the primary objectives of the contact tional field?
92 (11/14) • CRA Consumer Compliance HandbookCommunity Contact Procedures
Specific to Community-Based Organizations and types of units?
a. Does this community have a significant number d. How would you rate the need for housing
of people who would be ‘‘uncounted’’ in official among various sectors of the community, such
census figures? If so, why? Does your organi- as the elderly, individuals on special assis-
zation give estimates of the uncounted or real tance, female heads of households, the home-
population? less, others?
b. What are the primary and secondary issues that e. Are there structural inadequacies in the type of
low-income people in this area are concerned housing stock available for low-income popula-
with in the short term? In the long term? tions in this area? Is housing rehabilitation a
c. What are the most pressing concerns—e.g., priority issue among those your organization
adequate housing, access to retail goods, has identified?
adequate public transportation facilities, adult
education, job training and placement, English Specific to Real Estate Brokers:
as a second language (ESL), health facilities—
that you have been able to identify facing a. (Refer to specific geographic areas.) What are
low-income residents? the current economic conditions in this general
area? Are housing values going up or down? If
d. What language(s) are spoken in the commu- it is an ‘‘up’’ market, what are some of the forces
nity? contributing to its success? If down, what are
some of the issues contributing to its decline?
Specific to Economic Development Agencies b. Has there been any recent development activity
(Including Utility Companies): in this area? What is the nature of the develop-
ment (commercial, residential, affordable hous-
a. What are the primary economic strengths of this ing, public projects)? What has been the impact
area? Primary weaknesses? (Note: Economic on the neighborhood?
development agencies typically operate at the
county or MSA level. Using follow-up questions c. Are there mobile homes or concentrations of
and probing techniques, attempt to get as local mobile homes, such as mobile-home parks, in
an assessment as possible.) any area?
b. Are there development plans currently under- d. What is the average length of time that single-
way for infrastructure-related projects, such as family homes are on the market in this neigh-
bridges, sewers, etc.? If so, what is the borhood?
suggested timetable? Will the project generate e. Other types of residences? Other neighbor-
or is it generating jobs for low- or moderate- hoods?
income residents?
f. Do you know of any changes in the near future
c. What are the main economic development that would impact the market for residential/
strategies (examples include business attrac- commercial properties in a specific area? What
tion, business retention, marketing, small busi- are these changes (political, environmental,
ness development, etc.) that you are currently legal, etc.)?
pursuing for the overall county or MSA? For a
g. Do you have copies of any appraisal reports for
particular neighborhood? What priority is given
commercial and residential properties? For
to small business, small farm, and community-
which areas (obtain, when possible)?
based development (such as grocery stores,
day care facilities, etc.)? h. Are you aware of appraisal-related problems
in this neighborhood, such as the lack of
comparables?
Specific to Housing Organizations (State, i. What credit products do your customers typi-
Local, Etc.): cally use to purchase a home? Conventional
a. What is the waiting list for various affordable mortgages? Government loans? Land con-
housing programs in the area? tracts? Why?
b. Have you received complaints from tenants that j. What are the various sources of financing that
buildings are not in compliance with local your customers typically use? Banks? Thrifts?
building codes? In your perception, how wide- Mortgage companies? Home improvement deal-
spread is this problem? ers? Credit unions? Employer-related sources
c. What is the nature of demand for affordable (i.e., GMAC)? Others? Are particular combina-
housing? How does this compare to available tions of sources more typical than others?
housing stock, both in terms of number of units k. What are the characteristics of likely investors
Consumer Compliance Handbook CRA • 93 (11/14)Community Contact Procedures
for multifamily housing properties in a specific what projects or products? For what clients
neighborhood? What are the likely financial (e.g., what were the income characteristics of
risks and rewards for investors in this area? those who benefited)?
(Compare with other neighborhoods.)
b. Does your organization partner with other
groups, including religious organizations, gov-
Specific to Foundations: ernment agencies, and neighborhood organi-
zations, in conducting any of its program
a. What types of eligibility criteria are currently
activities?
established for community development
programs? c. Tell me about any other organizations you work
with in meeting your clients’ needs. What other
b. Which organizations and projects do you fund?
organizations serve this community in the areas
How much money is committed to these
of affordable housing? Small business develop-
organizations and/or projects for this year?
ment? Commercial, day care, or other
c. How long is the money committed for? community-related facilities? Job training? Credit
d. Out of the programs and/or organizations that counseling? Low-income advocacy?
you funded in this area, which are the most d. Which of these organizations do you consider
effective in the affordable housing area? In the most active? If I wanted more information from
small business development or community them, whom should I contact?
development area?
e. Which financial intermediaries do you consider
particularly effective? Why?
Assessing Opportunities for Financial f. Are you seeking funds from local financial
Institution Participation institutions for any current projects?
The degree to which financial institutions are g. What is the nature of the project? Is it a
involved in community development projects or development-based product? Is it related to
services depends in some part on the extent of credit needs in the community? Is there a
other resources and partners available within the specific neighborhood or group of individuals
community. Examiners are expected to obtain that this project will benefit? How?
information on the availability of resources dedi- h. What are the specific requirements for the
cated to the local credit or development needs that financing that you are seeking?
have been identified. Examiners are also expected
to gauge the level of the contact’s efforts in i. Are you aware of similar projects that other
approaching local financial institutions and the organizations are working on? What can you tell
mechanisms of any financing involved, if any. me about those? Whom can I contact to learn
more?
In addition to any background materials reviewed
in the preparation portion of the examination,
contacts can provide relevant information on
State and Local Economic Development
• The number and nature of community develop- Agencies, Government Agencies:
ment or credit-related projects being developed a. What, if any, commercial development projects
for the benefit of the community, are underway? Where are they located? Are
• The number of organizations or government jobs created? Will low- or moderate-income
programs committed to those activities, individuals benefit? How?
• The extent to which partnerships or other forms of b. What are the number and nature of various
coordination are evident in the area, economic development programs funded by
the city or state? How many residents do these
• The level of resources devoted to these activities,
programs benefit annually?
and
c. Which of these programs, if any, are designed
• How active these programs or resources are with
to leverage funds from financial institutions?
respect to promoting the credit or banking needs
What are the mechanics of the program? How
that local representatives or residents have
many projects have been funded to date?
identified.
Which financial institutions have participated in
these programs? Is there a particular area or
Community-Based Organizations: group that these funds target?
a. Has your organization ever participated in d. Do you have programs designed specifically for
activities, either formally or informally, with affordable housing or small business develop-
financial institutions? If so, which ones? For ment? If so, how many small businesses and/or
94 (11/14) • CRA Consumer Compliance HandbookCommunity Contact Procedures
small farms benefit? What is your definition of financial institutions? In what ways has financial
small business? institution participation had a positive impact?
e. What are the funding levels of these programs? In what ways has it had a negative impact?
How many projects have been funded to date? Probe for such project aspects as timing,
Is there a particular neighborhood or group that financing terms, etc.
these funds target? If so, what are they? d. Are local financial institutions proactive in
f. Have any financial institutions participated in developing relationships or offering assistance?
these programs? If so, which ones? If so, which ones?
g. Do you currently have other projects or have e. What financial institution(s) does your group
you had projects in the past that required either recommend to your constituents? Why?
investment or other forms of financing from a f. What obstacles, if any, prevent greater involve-
financial institution? What are/were the charac- ment from financial institutions in meeting local
teristics of the project? Its financing? Include credit needs?
projects involving bond issuances, etc. What
g. Have you ever been invited by institutions to
were the results? Innovative? Risky?
participate in institution-sponsored activities? If
h. What financing mechanisms are needed, yes, specify the activities’ purpose and the role
planned, or in place for any development or you played.
infrastructure-related projects?
h. Has your organization ever received complaints
about individual institutions?
Real Estate Brokers: i. Did the people affected know about the com-
a. Do you know about local or state financing plaint process or were they informed about it?
programs for affordable housing, small busi- j. Did any of the complaints involve allegations
ness, or commercial development? How did that the institution(s) discouraged people from
you hear of these programs? submitting an application? Did any complaints
b. Are there specific home insurance or financing involve geographic or racial redlining, or any
programs that you utilize or to whom you refer other forms of discrimination? What happened?
customers? Which ones? Which do you utilize k. Is anyone in your group or known to your group
specifically for your low-income customers? willing to offer specific evidence of discrimina-
c. Which financial institutions in the area are you tory actions by specific institutions? (If allega-
aware of that access these programs? How tions of discrimination, discouragement, or
actively? Which do not? redlining are made with respect to an institution
regulated by your agency, forward the relevant
information to the institution’s primary regula-
Obtaining Local Perspectives on the tor.)
Performance of Financial Institutions l. In your opinion, which institutions in the area
In addition, another function of the community have been particularly outstanding in meeting
contact process is to obtain feedback from the the community’s needs? Why? What, specifi-
community on the performance of local financial cally, has been done by these institutions?
institutions. The examiner is expected to gather m. In your opinion, which area institutions have
information on the willingness and responsiveness been particularly notable for their unwillingness
of financial institutions, including the institution to respond to the community’s needs? Why?
under examination, to work with local residents and
professionals in meeting credit and community n. In your opinion, how well does [institution name]
economic development needs. meet the credit needs of this community?
General: Community-Based Organizations:
a. With which banks, savings and loans, or a. Have you discussed local credit needs with any
mortgage companies have you been involved? financial institutions? What were the results?
What was the nature of your involvement?
b. Do any institutions provide in-kind services, i.e,
b. Has your organization ever participated in loaned executives, etc.?
activities, either formally or informally, with
c. What efforts are made to inform institutions
financial institutions? If so, which ones? How did
and obtain their participation in the organiza-
this professional relationship develop?
tion’s activities? Which institutions participate
c. What were the results of your involvement with and to what degree? Which institutions, if any,
Consumer Compliance Handbook CRA • 95 (11/14)Community Contact Procedures
declined to participate? not receive your referrals for small businesses
d. If your organization works with government and why?
enhancement programs, do financial institu- h. What percentage of referred homebuyers nor-
tions work with you on that product? If so, which mally go to the recommended lenders?
ones?
i. What percentage of referred homebuyers nor-
e. What efforts have you employed to improve mally get loans from recommended lenders?
your organization’s relationship with any institu-
j. What other methods could be used to increase
tions? Which institutions? How successful have
the use of insured financial institutions by
your efforts been?
people in your market area? In particular, are
some financial institutions attracting portions of
the market and not others? For which products?
Real Estate Brokers:
k. Do women or minorities have more difficulty
(Be sure to include those operating in low- or than men in obtaining mortgage loans? If so,
moderate-income areas.) why? Which institutions are perceived as not
a. Do you frequently work with financial institu- meeting the needs of women or minority
tions or other lenders that originate home applicants?
mortgages? l. Are there outreach activities by particular
b. Which institutions do you receive rate sheets institutions for women or minority customers?
from on a consistent basis? How are they Do you perceive these programs as positive?
typically delivered to you? m. In your experience, are there certain institutions
c. Are local lenders willing to work with you for favored in the minority and/or women’s busi-
first-time homebuyers? If so, which ones? Why ness community?
or why not?
d. Are local lenders willing to work with you on Business, Labor, or Consumer Groups
exceptions on credit reports? If so, which ones? Working with the Women’s or Minority
Why or why not? Business Community:
e. What knowledge, if any, do you have of credit a. What is the general perception of financial
standards being adjusted in either a preferen- institutions in the minority business community?
tial or discriminatory manner? Which lenders? In the women’s business community? Why?
What were the circumstances? b. Do any financial institutions have a small
f. Have you worked with lenders that have taken business department targeting women or
customers under the Fannie Mae 97 percent minorities? Which ones? How is it done?
program? Freddie Mac? Others? c. Which institutions have separate minority or
g. Which lenders do not receive your referrals for small business counseling services? Do the
home purchases and why? Which lenders do counselors also have lending authority?
96 (11/14) • CRA Consumer Compliance HandbookCommunity Reinvestment Act
FFIEC Community Contact Form
Examiners should summarize each interview they conduct on the Community Contact Form. The purpose of
this form is to provide a consistent means by which financial institution regulators can share information
obtained through interviews for a particular community. The individual conducting the interview should inform
the interviewees that this information will be shared with other regulatory agencies.
1. Regulatory agency:
2. Date of contact:
3. Interviewee information:
Name: Title:
Organization represented:
Type/organization category:
Address:
City: State:
Interviewee’s telephone:
Add area served:
Served state(s): Served MSA(s): Served counties:
4. Was this the first contact with this organization (in connection with a current examination) or a follow-up
contact?
First Follow-up
5. Was the interview conducted in conjunction with an examination? If yes, list financial institutions.
Institution name Cert Charter Docket RSSD
6. Summarize the organization’s purposes, functions, and sources of funding. Include the organization’s
impact if applicable (for example, number of low-income clients served, number of units built, etc.).
7. Political or geographic boundaries of area focused on during this specific contact.
8. Interview summary.
(a) Community profile:
Current economic conditions; current demographic characteristics; general banking and credit needs; other (e.g.,
identifying names of low- or moderate-income neighborhoods).
(b) Opportunities for participation by local financial institutions:
Community development, other credit-related projects, or financing programs; level of opportunity for bank
involvement.
(c) Performance of local financial institutions:
Perceptions or experience regarding the degree of involvement of the local financial institution industry and of the
specific financial institution (if obtained) in the community.
9. Person in charge of examination:
Interviewer:
Reviewed by:
Consumer Compliance Handbook CRA • 97 (11/14)You can also read
