Compliance Q&A: CRA Community Development Credit Considerations

Q. We have a designated disaster area close by and were wondering which activities in these areas would qualify for CRA Community Development?

A. There are a variety of activities relating to designated disaster areas (DDA) that may qualify. Loans, investments/donations, and services that revitalize or stabilize DDAs may be eligible for CRA consideration if the activities (1) help attract new or retain existing businesses or residents; and (2) are related to disaster recovery. For example, qualifying activities could include a loan to a business affected by the disaster that would otherwise have to close; an investment in a municipal bond that will rebuild essential community buildings that were destroyed by the disaster; providing financing for rebuilding needs; or delivering financial expertise to an organization providing housing for displaced residents. The activities must generally occur within 36 months of the disaster declaration to be eligible to receive consideration; however, the agencies can extend this period for exceptional situations, such as where there is a demonstrable need in a particular DDA that requires longer-term assistance. Banks subject to CD evaluation are encouraged to monitor and document activities in DDAs that may be considered in their next CRA exam.   


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