Circular
Community Reinvestment Revised Interagency Questions and Answers
November 13, 1997
Circular No. 10993

To All State Member Banks, and Others Concerned, in the Second Federal Reserve District:

The following is from a statement issued by the Federal Financial Institutions Examination Council (FFIEC):

The Federal Financial Institutions Examination Council (FFIEC) has announced an update of "Interagency Questions and Answers Regarding Community Reinvestment," its comprehensive interpretive document on the Community Reinvestment Act (CRA).

The FFIEC published "Interagency Questions and Answers" in the Federal Register on October 6, 1997, on behalf of its member banking regulatory agencies - the Comptroller of the Currency, the Federal Deposit Insurance Corporation, the Federal Reserve System and the Office of Thrift Supervision (the "agencies"). The agencies consider the "Interagency Questions and Answers" to be their primary vehicle for disseminating guidance interpreting their CRA regulations.

The revised publication: (1) clarifies that not all activities that finance businesses meeting certain size eligibility standards necessarily promote economic development under the CRA regulations; (2) explains how the agencies' examiners evaluate home mortgage loans to middle- and upper-income borrowers in low- and moderate-income areas under the CRA regulations' lending test; (3) explains how a financial institution should geocode [assign a census tract or block numbering area to] a small business or small farm loan where the borrower provides only a post office box or rural route and box number; and (4) cautions that the agencies' quarterly publication of a list of financial institutions that will be examined for CRA compliance is subject to change.

In addition, the document especially seeks comment on several proposed questions and answers concerning how to determine whether particular activities have a "primary purpose" of community development. It also invites public comment on the new and revised questions and answers, particularly the guidance regarding home mortgage loans to middle- and upper-income individuals in low- or moderate-income areas, as well as any issues raised by the CRA and the "Interagency Questions and Answers." Staff of the agencies intend to continue to update the Interagency Questions and Answers periodically and may include questions received from the public in future guidance.

For further information contact: Office of the Comptroller of the Currency, Malloy Harris (202) 874-4446; Federal Reserve Board, Glenn E. Loney (202) 452-3585; Federal Deposit Insurance Corporation, Bobbie Jean Norris (202) 942-3090; or Office of Thrift Supervision, Theresa Stark (202) 906-7054.

An excerpt from the Federal Register of October 6, 1997, containing the revised Interagency Questions and Answers is available as a file (pdf - 175kb). Further information on this matter may be obtained from the persons specified in the above statement or, at this Bank, from Janice A. Oser Supervising Examiner.