Federal Deposit
Insurance Corporation

Office of the Comptroller of the Currency
250 E Street, SW
Mail Stop 1-5
Washington, DC 20219
Re: Docket Number 05-17

Jennifer J. Johnson, Secretary
Board of Governors of the Federal Reserve
20th Street and Constitution Ave., NW
Washington, DC 20551
Re: Docket No.OP-1240

Robert E. Feldman, Executive Secretary
Attention: Comments
Federal Deposit Insurance Corporation
550 17th Street, NW
Washington, DC 20429
RIN number 3064-AC97

To Whom it May Concern:

As a member organization of the National Community Reinvestment Coalition, Rural Opportunities Inc. appreciates the opportunity to comment on the proposed changes to the Community Reinvestment Act Q&As. As an organization that develops and manages low income housing rental property, provides homebuyer counseling and down-payment assistance for first time homebuyers, and runs a micro-credit program in low and moderate income rural communities, we have a special interest in several of the proposed changes to the Q&A.

In light of the agencies ongoing invitation for comments, we would also propose, based on our experiences, several additions to the Q&A which would help financial institutions better meet the housing and economic development needs of low and moderate income rural people. In your proposed revision of the question “What are examples of qualified investments?” we fully support your addition of rural business investment companies to the list, but note that there are other very important activities which are not specifically named in this way.

For instance, while many financial institutions now provide some limited support for first time homebuyers programs, it is still difficult for the non-profit partners of these financial institutions that provide quality home buyer counseling to obtain adequate cost recovery for these services. It is especially difficult for non-profits to obtain support for the post-purchase counseling programs which are crucial for providing a countervailing influence to the predatory lenders who are trapping so many first time homebuyers into bad borrowing decisions in the first years after they become home owners. We believe it would be helpful for the agencies to specifically mention investment in making quality post-purchase home owner counseling a sustainable activity as a type of investment that will receive particularly positive attention in the CRA Performance Evaluation.

Rural Opportunities also has developed and currently manages thousands of low and moderate income rental units. We have found that maintaining quality, decent housing is much easier when we can afford to provide good quality supportive services for these units, but we have also found this to be the hardest part of the affordable rental housing program to sustain . We believe that it would be useful if the regulatory agencies mentioned investment in the provision of supportive services as an activity that should receive positive attention in the CRA Performance Evaluation.

Rural Opportunities also runs a micro-credit program. These programs are hard to sustain without financial institution investment either in the form of operating grants or below market rate loans. Specifically mentioning operating grant support for micro-credit programs in the Q&A would help non-profits help financial institutions meet the needs of low and moderate income small business borrowers.

In response to proposed changes in the Q&A we are concerned about the proposed change that provides CRA points for financing middle- and upper-income housing developments in distressed rural middle-income census tracts. Elsewhere in the existing Q&A document and in your proposed questions, the agencies provide credit for mixed-income housing developments. Mixed-income housing helps to overcome segregation by income and is an activity worthy of CRA points if the housing contains a significant number of low- and moderate-income families. We therefore urge you to eliminate the possibilities of banks receiving significant CRA points for financing middle- and upper-income housing. We urge you instead to provide CRA credit for mixed-income housing.

We applaud the proposed questions on community development services that provide an important emphasis on low-cost banking services for low- and moderate-income consumers. Low cost banking services tied to remittance services are important services for the migrant farm worker population that Rural Opportunities serves. We support your inclusion of these services in the Q&A.

We also hope that as the interpretations for the Intermediate small bank exams continue to be developed that the agencies will provide more consistency in the time frame in which banks are examined. In the past some of the regulators scheduled a large bank exam shortly after the time the institution qualified as a large institution, while other agencies some times delayed the first large bank exam for years. The agencies nit-picking proposal to index the asset amount that triggers the intermediate and large bank examinations should be accompanied by commitments that all regulators will examine an institution by its new evaluation standard within a year of the institution becoming eligible for the higher level evaluation. We urge the regulators to unify in scheduling the intermediate institution performance evaluations within a year after the institutions qualify as an intermediate sized institution.

We have also read the comments of the National Community Reinvestment Coalition and wholly support their comment letter.

Thank you for consideration of our concerns.

Sincerely,

Lee Beaulac
Senior VP for Community & Economic Development