community reinvestment act

OCC’s CRA June 2020 Final Rule – Maybe

For those of you regulated by the OCC and trying to plan the implementation of the June 2020 final CRA rule – Look Out! In OCC Bulletin 2021-24, issued May 18, 2021, the OCC stated that it will “Reconsider” the CRA Final Rule. Yes, you read that correctly.

As many financial institutions and software vendors that support CRA platforms waited for more details and guidance on the various components under the new qualifications and quantification methodologies, this news brings about a sense of relief.

Under the reconsideration:

  • The OCC will not object to the suspension of the development of systems for, or other implementation of, provisions with a compliance date of January 1, 2023, or January 1, 2024, under the 2020 CRA rule.
  • At this time, the OCC does not plan to finalize the December 4, 2020, proposed rule that requested comment on an approach to determine the CRA evaluation measure benchmarks, retail lending distribution test thresholds, and community development minimums under the June 2020 rule.
  • The OCC is discontinuing the CRA information collection pursuant to the Paperwork Reduction Act notice published in the Federal Register in December 2020.

So, what does this mean?

The “Reconsideration” will not implement or rely on the evaluation criteria in the June 2020 Rule pertaining to:

  • Quantification of qualifying activities (12 CFR 25.07 and 25.08).
  • Assessment areas (12 CFR 25.09).
  • General performance standards (12 CFR 25.10 through 25.13).
  • Data collection (12 CFR 25.21).
  • Recordkeeping (12 CFR 25.25).
  • Reporting (12 CFR 25.26).

The OCC Bulletin did state, however, that the provisions in the June 2020 CRA Final Rule that were effective with a compliance date of October 1, 2020, will remain intact.  The OCC interpreted and explained these provisions in OCC Bulletin 2020-99 and included:

  • Issuance of OCC Bulletin 2021-5, which provided bank type determinations, lists of distressed and underserved areas, and the median hourly compensation value for Community Development service activities. 
  • Deployment of the CRA Qualifying Activities Confirmation Request process for banks and other stakeholders to request confirmation whether an activity meets the qualifying criteria under the June 2020 CRA rule.
  • Provision of training on provisions of the June 2020 rule with the October 1, 2020, compliance date in a series of webinars for examiners and bankers.

TCA believes the provisions noted above are positive steps, especially with the qualification confirmation from the OCC to assist in determining Community Development activities along with applying an hourly compensation factor to Community Development services.

At this time, banks need to stay the course. Banks previously subject to data collection and reporting requirements under the 1995 CRA framework will continue to report large bank CRA data during the transition period, as specified in OCC Bulletin 2020-99.

Also, banks should maintain appropriate documentation for CRA examination purposes as outlined under OCC Bulletin 2020-99. This documentation should include detailed qualifying criteria of the activity or service to low- and moderate-income individuals or locations, the area(s) served by the activity, and the date and amount of the activity (including the basis for full or partial consideration).

Additional OCC Bulletins related to CRA communications are included below for your reference:

We can only hope that in the near future all regulatory agencies will work together to develop and implement one single CRA final rule that is consistent in practice and interpretation.

If you need assistance with your bank’s Community Reinvestment Act program, need CRA Lending Pattern Data or help identifying Community Development activities, give us a call and find out how TCA is “A Better Way” to maintain your CRA compliance!

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