Opportunity Zones

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    If we are building homes in a designated Opportunity Zone, does it qualify as a Community Development Loan?

    Brent V

    A community development loan means a loan that:
    (1) Has as its primary purpose community development; and
    (2) Except in the case of a wholesale or limited purpose bank:
    (i) Has not been reported or collected by the bank or an affiliate for consideration in the bank’s assessment as a home mortgage, small business, small farm, or consumer loan, (unless the loan is for a multifamily dwelling (as defined in § 1003.2(n) of this title); and
    (ii) Benefits the bank’s assessment area(s) or a broader statewide or regional area that includes the bank’s assessment area(s).

    Community development means:
    (1) Affordable housing (including multifamily rental housing) for low- or moderate-income individuals;
    (2) Community services targeted to low- or moderate-income individuals;
    (3) Activities that promote economic development by financing businesses or farms that meet the size eligibility standards of the Small Business Administration’s Development Company or Small Business Investment Company programs (13 CFR 121.301) or have gross annual revenues of $1 million or less; or
    (4) Activities that revitalize or stabilize
    (i) Low- or moderate-income geographies;
    (ii) Designated disaster areas; or
    (iii) Distressed or underserved nonmetropolitan middle-income geographies designated by the Board, Federal Deposit Insurance Corporation, and Office of the Comptroller of the Currency, based on—
    (A) Rates of poverty, unemployment, and population loss; or
    (B) Population size, density, and dispersion. Activities revitalize and stabilize geographies designated based on population size, density, and dispersion if they help to meet essential community needs, including needs of low- and moderate-income individuals.

    For the loan to qualifies for community development credit:
    • It must hit one of the four CD hooks listed above. It is not clear from the information included in your question whether that criteria has been met.
    • The loan may not be HMDA reportable. Construction-permanent loans generally are HMDA reportable.

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