§__.22(b)(5) Evaluation of Innovative or Flexible Lending

§__.22(b)(5) – 1

Q: What do examiners consider in evaluating the innovativeness or flexibility of an institution’s lending under the lending test applicable to large institutions?

A1. In evaluating the innovativeness or flexibility of an institution’s lending practices (and the complexity and innovativeness of its community development lending), examiners will not be limited to reviewing the overall variety and specific terms and conditions of the credit product themselves. Examiners also consider whether, and the extent to which, innovative or flexible terms or products augment the success and effectiveness of the institution’s community development loan programs or, more generally, of its loan programs that address the credit needs of low- or moderate-income geographies or individuals. Historically, many institutions have used innovative and flexible lending practices to customize loans to their customers’ specific needs in a safe and sound manner. However, an innovative or flexible lending practice is not required in order to obtain a specific CRA rating. See Q&A §__.28 – 1. Examples of lending practices that are considered innovative or flexible include:

 

Source: Interagency Questions & Answers Regarding Community Reinvestment | July 2016

Last modified April 28, 2023