CRA, FCRA & HDMA: Regulatory Changes and Relief for Financial Institutions in 2020

On March 9, 2020, the Board of Governors of the Federal Reserve System (Federal Reserve), the Federal Deposit Insurance Corporation (FDIC), and the Office of the Comptroller of the Currency (OCC) released a joint statement encouraging financial institutions to meet the financial-services needs of customers and communities affected by the COVID-19 pandemic.

Effective through the six-month period after the national emergency declaration is lifted—unless extended—the statement encourages financial institutions to work with affected customers and communities in low-and moderate-income areas by awarding financial institutions with Community Reinvestment Act (CRA) consideration for certain activities that are consistent with safe and sound banking practices and applicable laws. The statement is applicable to financial institutions with total assets under $1 billion. 

Below is an overview of COVID-19 relief initiatives that, when provided to borrowers, can result in financial institutions receiving CRA consideration.

Relief Initiatives

Financial institutions can receive CRA consideration when providing relief assistance to low- and moderate-income individuals, small businesses, and small farms affected by COVID-19 in several different ways.

Retail Banking and Lending

Relief for retail-banking services and retail-lending activities may include the following:

  • Waiving certain fees, including automated teller machine (ATM) fees for customers and noncustomers, overdraft fees, late-payment fees on credit cards as well as other loans, and early withdrawal penalties on timed deposits
  • Easing restrictions on cashing out-of-state and noncustomer checks
  • Expanding the availability of other short-term, unsecured credit products for creditworthy borrowers
  • Increasing credit card limits for creditworthy borrowers
  • Providing alternative service options to customers in light of limited ability to access branches
  • Offering payment accommodations, such as allowing borrowers to defer or skip payments or extending the payment due date, which would reduce delinquencies and negative credit bureau reporting caused by COVID-19-related issues

Community Development

CRA consideration may also be given for community development activities that:

  • Help to revitalize or stabilize low- or moderate-income geographies as well as distressed or underserved nonmetropolitan middle-income geographies
  • Support community services targeted to low- or moderate-income individuals

These activities may include:

  • Loans, investments, or services that support digital access and access to health care
  • Economic development activities that sustain small business operations
  • Investment or service activities that support the provision of food supplies and services

As long as a financial institution has been responsive to the community development needs that exist in its assessment areas, favorable consideration will also be given to community development activities located in a broader statewide or regional areas that include the financial institution’s CRA assessment area.

Additional Regulatory Changes

The following acts and amendments also provide incentives to financial institutions.

Home Mortgage Disclosure Act Amendment

Effective July 1, 2020, Regulation C of the Home Mortgage Disclosure Act (HMDA) is set to increase the threshold for reporting data for closed-end mortgage loans from 25 to 100.

Institutions originating fewer than 100 closed-end mortgage loans in each of the two preceding calendar years won’t have to report this data.

Also, at the expiration of the current threshold of 500 open-end lines of credit, the new threshold will be set to 200 open-end lines of credit, effective January 1, 2022.

Fair Credit Reporting Act and CARES Act

Consistent with the Coronavirus Aid, Relief, and Economic Security (CARES) Act, financial institutions are offering various forms of payment flexibility to their borrowers, which include payment deferrals and skip payments. 

The CARES Act amends a portion of the Fair Credit Reporting Act (FCRA) so that payment accommodations resulting from the effects of COVID-19 won’t result in the reporting of delinquencies.

The Consumer Financial Protection Bureau (CFPB) stated it supports furnishers’ voluntary efforts to provide payment relief. It also stated it doesn’t intend to cite in examinations or take enforcement actions against financial institutions that provide information to consumer reporting agencies that accurately reflects the payment-relief measures they’re employing.

Additional changes to the timing requirements related to consumer disputes were also noted. The FCRA requires consumer reporting agencies and furnishers to investigate disputes within 30 days of receipt of the consumer’s dispute.

However, due to the pandemic, the CFPB has stated it will consider a consumer reporting agency or furnisher’s circumstances. It doesn’t intend to cite in an examination or bring an enforcement action against a consumer reporting agency or furnisher making good-faith efforts to investigate disputes as quickly as possible, even if dispute investigations take longer than the statutory timeframe.

We’re Here to Help

To learn more about COVID-19 relief initiatives for customers and related considerations for financial institutions, contact your Moss Adams professional.

Note on COVID-19

During this unparalleled time, we’re closely monitoring the COVID-19 situation as it evolves so we can provide up-to-date guidance and support to help you combat uncertainty. For regulatory updates, strategies to help cope with subsequent risk, and possible steps to bolster your workforce and organization, please see the following resources: