Community Reinvestment Act (CRA) Compliance Flashcards

What information must a bank's CRA public notice include?

Answer: Information about the CRA process and how the public may submit comments to the bank and its regulator

The CRA public notice must inform the public about the CRA, explain how to access the bank's public file, and describe how community members may submit comments to the bank and its federal regulator.

HMDA data is most directly useful during CRA examinations because it:

Answer: Shows the geographic distribution and borrower demographics of mortgage loan applications and originations

HMDA data captures loan application and origination information by census tract and borrower income/race, which CRA examiners use to assess the geographic and demographic distribution of the bank's mortgage lending.

An intermediate small bank under CRA regulations is evaluated using:

Answer: A community development test combined with the small bank lending test

Intermediate small banks are evaluated under the small bank lending test plus a mandatory community development test, giving them more requirements than small banks but fewer than the full three-part large bank framework.

'Redlining,' as addressed by the CRA, refers to:

Answer: Refusing or significantly limiting financial services in geographic areas based on the race or ethnicity of residents

Redlining is the discriminatory practice of denying or limiting banking services in specific geographic areas based on the racial or ethnic composition of those communities, and is a central concern the CRA was designed to address.

Under the CRA service test for large banks, examiners evaluate:

Answer: The accessibility and distribution of retail delivery systems and the range of community development services provided

The service test evaluates how accessible the bank's retail delivery systems (branches, ATMs) are to LMI individuals and areas, as well as the extent and innovativeness of community development services provided.

Which of the following BEST describes a 'community development loan' for CRA purposes?

Answer: A loan whose primary purpose is community development, such as financing affordable housing or supporting LMI-serving community organizations

Community development loans are defined by their primary purpose: supporting affordable housing, community services for LMI individuals, economic development for small businesses, or revitalization of LMI areas.

What is the most significant regulatory consequence of receiving a 'Substantial Noncompliance' CRA rating?

Answer: Severe restrictions on regulatory approvals for mergers, acquisitions, and new branch applications

A 'Substantial Noncompliance' rating is the most severe CRA outcome and creates major obstacles to obtaining regulatory approval for any expansion activity, including mergers, acquisitions, and new branch openings.