FAQs - Frequently Asked Questions

What is D:I?

D:I or Debt:Income, tells a potential lender the amount of debt an applicant/borrower has in relation to their income. It is used as a guide in determining a potential borrower’s ability to repay debt.

What is LTV?

LTV or Loan to Value, tells a potential lender the total amount of debt outstanding on a particular piece of collateral, in relation to the collateral value. It is used primarily in mortgage lending to determine if the value of collateral can support additional debt.

What is CRA?

CRA or the Community Investment Act, is a Federal Reserve Board regulation (Regulation BB – 12 CFR 228) that requires banks to define a primary lending market, by census tract. The market cannot exclude low and moderate income areas

What are the requirements of CRA?

CRA requires that lenders grant at least 50% of all loans generated within their defined market (assessment area). It also requires that they lend across all income areas and/or groups, including low-moderate income areas/groups.

Why types of loans are included?

While the primary focus of CRA is housing related loans and small business/small farm loans, it may include a variety of loan types.

How does a bank keep track of its progress with regard to CRA?

Every loan originated by a lender is coded by “geography”, which includes the MSA/MA, State Code, County Code and Census Tract. Using this information in conjunction with the bank's defined market, a bank can monitor its own performance using a variety of software products. The federal government provides two such products free of charge and there a number of vendor products available that offer analytical tools designed specifically for this purpose.

What is MSA/MA, State Code, County Code and Census Tract?

These are codes assigned by the U. S. Census Bureau to define geographic areas of the country.