Federal Regulatory Update

MRGDocs' team of legal experts provide the most up-to-date overview of regulatory changes across state and federal agencies. This update is produced by Marsha Williams, a national expert in residential mortgage law and Chair of the National Mortgage Compliance Practice Group.

OCC Bulletin 2018-17

The Office of the Comptroller of the Currency (“OCC”) recently issued a bulletin on June 15, 2018 to provide national banks, federal savings associations, and federal branches and agencies (collectively the “banks”) with clarification regarding OCC supervisory policies and processes on how examiners evaluate and communicate bank performance under the Community Reinvestment Act (“CRA”).  These supervisory policies and processes apply to each bank CRA evaluation.

CRA regulations require the OCC to evaluate a bank’s record of helping to meet the credit needs of its assessment areas through its lending activities by considering in most cases, among other things, a bank’s home mortgage lending.  The OCC evaluates performance and bases performance evaluation conclusions on home mortgage lending in the aggregate. Home mortgage lending includes all home mortgage loans as defined under the Home Mortgage Disclosure Act (“HMDA”), whether or not the bank is required to report under HMDA.  Examiners should consider and address any significant differences in the bank’s lending record among the different type of home mortgage loans in evaluating performance.

For banks that report under HMDA, the OCC compares the bank’s lending distributions to demographic data and aggregate data under the applicable lending test, regardless of whether the bank is a national bank or federal savings association.  Aggregate data include loans originated or purchased by lenders that report under HMDA and/or are subject to CRA small business/small farm reporting requirements. The OCC also compares a non-HMDA reporting bank’s lending distributions to aggregate HMDA data (based on banks that report under HMDA), in addition to comparing the bank’s data to demographic data.  The OCC considers this information in context recognizing that the analysis for non-HMDA reporting banks is typically based on a sample of loans, rather than on total bank originations and purchases over the evaluation period.

The CRA supervisory policy also addresses the following areas for all CRA evaluations. These policy clarifications, which are effective immediately, address:

  • implementation of full-scope and limited-scope reviews;
  • consideration of activities that promote economic development;
  • use of demographic, aggregate, and market share data;
  • evaluation of the borrower distribution of loans outside bank assessment areas (AA);
  • evaluation frequency and timing; and
  • the CRA performance evaluation period.

Clarifications on standard processes related to CRA evaluations were communicated to examiners and became effective on May 2, 2017. These clarifications address:

  • the type of information considered and presented in the written performance evaluation (PE) and the process for sharing CRA evaluation data and ratings with OCC-supervised banks;
  • factors considered when evaluating bank performance under the small- and large-bank lending tests;
  • branch distribution when concluding on the availability and effectiveness of bank systems for delivering retail banking services;
  • internal and external performance context factors when concluding on performance;
  • consideration of CRA plans imposed as conditions of approval of corporate applications in the evaluation process.

These policies and processes apply to the evaluations of all OCC-supervised banks subject to the CRA, regardless of the bank’s asset size or CRA evaluation type. Transitional procedures are being implemented. If banks with CRA evaluations in progress believe these policies will create a burden during an ongoing evaluation, they should raise this concern with their examiners.

For additional details and to read the full bulletin, visit https://www.occ.treas.gov/news-issuances/bulletins/2018/bulletin-2018-17.html.

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Marsha Williams

Senior Attorney

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