Wolters Kluwer views preparation as essential for Community Reinvestment Act compliance

Finalization of an updated Community Reinvestment Act (CRA) represents a sea change for lenders that will require significant adaptation, according to experts at Wolters Kluwer. In a recent press release, the company offered insights on how the evolution in banking, together with a revamped CRA regulation, will present new challenges for lenders.

“Every bank is going to be touched by this in some way, no matter the size of the bank. This changes the status quo for everybody,” said Timothy Burniston, Senior Advisor, Regulatory Strategy at Wolters Kluwer Compliance Solutions.

The company has long offered a regulatory compliance solution, CRA Wiz, that supports lenders’ efforts to comply with the regulation that took effect 46 years ago.

Burniston’s insights on finalization of a modernized CRA, were featured in a National Mortgage Professional magazine article, “Federal Reserve Approves Major CRA Overhaul After Nearly Three Decades” on the same day interagency finalization was achieved. The regulation is being published in the Federal Register and takes effect April 1, 2024, with key provisions becoming applicable on January 1, 2024.

In addition to carefully reading the final rule and supplementary information, Burniston writes that banks first consider how they may be affected by changes to assessment areas and CRA-eligible activities.

“Understanding geographically where you’re going to be evaluated and determining if there are areas where you are not currently being evaluated but will be in the future, is an essential first step in trying to understand how this rule will impact your bankmost,” he notes.

Among the significant changes reflected in the final rule—compared to the proposed rule—is the extension of the implementation period from one year to two years. Burniston says that it will be important for regulators to keep the CRA regulations responsive to short- and long-term disruptions and current with continuing changes within the banking industry as the implementation process moves forward. The final rule also makes adjustments to other substantive provisions such as retail lending assessment areas, retail lending performance ranges, major product lines, and how automobile lending will be considered in performance evaluations.