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The Guide to CRA Reporting states the following:
– An institution should collect information about small business and small farm loans that it refinances or renews as loan originations.
– Institutions must collect and report data on lines of credit in the same way that they provide data on loan originations.
– Lines of credit are considered originated at the time the line is approved or increased; and an increase is considered a new origination.The FFIEC 01/2021 CRA Micro Data guidance defines action date as: Date Originated or purchased.
In terms of lines of credit or renewed/extended term loans, I’m trying to confirm what should be used as the action taken date. In terms of the lines…approved date and originated dates seem to contradict one another.
When lines of credit are renewed, we issue an letter informing the borrower of the renewal and we typically use the date of the letter (i.e., origination date) for the action taken date. A new note is “not” executed. Is that correct or should we rely on the date the renewal was approved by the Bank, based on the CRA Reporting Guidance? Thoughts?
If the customer enters into a Modification Agreement that also contains an extension of term, the body of the Agreement may reflect an effective date that is different than the date of the Agreement or the date the Agreement was executed by the borrower. Should we use the effective date denoted in the Agreement as the action taken date, the date of the Agreement, or the date executed?
Thank you and we appreciate any assistance!
Question: When lines of credit are renewed, we issue an letter informing the borrower of the renewal and we typically use the date of the letter (i.e., origination date) for the action taken date. A new note is “not” executed. Is that correct or should we rely on the date the renewal was approved by the Bank, based on the CRA Reporting Guidance?
Answer: For a line of credit use the date approved. Using the date of the letter may be accepted by some examiners if the date of the letter is within a day or two of the decision date. I have concerns about your practice. The decision to approve could be made on December 30th and the letter is send on January 2nd. That would push the transaction into a new reporting year.
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