What the law asks of banks
The Community Reinvestment Act directs federal bank regulators to assess how insured banks help meet the credit needs of their communities, including low- and moderate-income neighborhoods, consistent with safe and sound operation. Examiners review lending and, depending on the bank's size, community development and service activity, and assign a public rating. That rating matters beyond reputation, because regulators consider a bank's record when deciding on applications such as mergers, acquisitions, and new branches, and community groups often comment on those applications. Which examination framework applies has been unsettled: the federal agencies adopted a major rewrite of the rules, a court blocked it, and the agencies have since proposed further changes, not all of them jointly, so the current standards should be confirmed for each exam cycle. If you were looking for help with the Canada Revenue Agency, which shares the acronym, that is a tax matter rather than this one.
New York's separate obligations
New York has its own community reinvestment law, administered by the Department of Financial Services, that applies to state-chartered banks and, more recently, to licensed non-bank mortgage lenders as well. State and federal evaluations can run on different schedules and use different methods. A state-chartered institution may therefore have to prepare for both. Mortgage companies that are new to these obligations often lack the data collection and community engagement records that banks have built over time.
Preparing for an examination or application
Keep accurate data on lending and service activity by geography, and document community development loans, investments, and services as they happen rather than reconstructing them before an exam. Maintain a record of community contacts and the public file that regulators expect. Before an expansion application, review the institution's recent ratings and any pending complaints that could draw comment. We help institutions understand which standards apply, review their performance records before examinations, and respond to adverse findings or protests on applications. We also help mortgage lenders entering the New York regime set up the records they will need.
