Opinion  Summary of Selected Opinion 00-033

Date:	01/01/2000
Organization:	Division of Banks

This opinion was issued in the first quarter of 2000.

Financial institution's participation in the Massachusetts Bankers Association mortgage lending initiative for qualification under the Commonwealth's Community Reinvestment Act

The Massachusetts Bankers Association(MBA) initiative consists of a consumer education brochure, the creation of a foreclosure prevention counseling program with the National Consumer Law Center, a collaboration with the Massachusetts Community and banking Council on a public awareness campaign on lending scams, and the development of industry guidelines for subprime mortgage lenders. These activities will help to promote financial literacy, protect consumers from fraudulent and unscrupulous lending practices, and help sustain home ownership.

The Division reviewed the applicable CRA regulations for evaluation of this proposal under the so called "service test." The service test evaluated an institution's record of helping to meet the credit needs of its assessment area(s) by analyzing both the availability and effectiveness of an institution's systems for delivering retail banking services and the development service is defined as a service that (a) has as its primary purpose community development; (b) is related to the provision of financial services; and (c) has not been considered in the evaluation of institution's retail banking services. See 209 CMR 46.12.

Based upon the above stated regulatory provisions as well as the information provided, the Division would consider a financial institution's participation in the MBA mortgage lending initiative a qualified community development service under the service test of the Commonwealth's CRA statute. It remains the position of the Division that each financial institution is to determine which actions will allow it to comply with CRA within safe and sound banking practices.