Explanation of Geographic categories used by OMB (Office of Management & Budget)

The construction of CRA Assessment Areas and the computation of income class for mortgage borrowers require an understanding about Metropolitan Statistical Areas (“MSA’s”) and other geographic area terminology defined by the OMB. This paper provides a brief description of critical and confusing geographic components that must be understood for CRA and Fair Lending purposes.

MSA and related terminology for CRA and Fair Lending Purposes

1. Combined Statistical Area (CSA): Combined Statistical Areas are aggregates of adjacent metropolitan or micropolitan statistical areas that are linked by commuting ties. CSA’s don’t include any counties that are not metro or micro areas. CSA’s have a 3-character code and are irrelevant for CRA Assessment Area purposes.
2. Core Based Statistical Area (CBSA): The term "Core Based Statistical Area" (CBSA) is a collective term for both metropolitan statistical areas and micropolitan statistical areas. A metroplitan area contains a core urban area of 50,000 or more population, and a micropolitan area contains an urban core of at least 10,000 (but less than 50,000) population. When a CBSA is classified as a metropolitan area its number is to be used for CRA and HMDA purposes unless the CBSA contains a Metropolitan Division (see below). In that case the Metropolitan Division (MD) number supersedes the MSA number (and the the HUD EMFI for the MD trumps the HUD EMFI for the MSA for purposes of calculating borrower income class). If a CBSA is classified as a micro area it is considered to be part of the state-wide non-MSA areas for AA delineation and HUD EMFI purposes. CBSA’s have 5-character ID’s.
3. Metropolitan Statistical Area (MSA): Metropolitan statistical areas (metro areas) are geographic entities defined by the U.S. Office of Management and Budget (OMB) for use by Federal statistical agencies in collecting, tabulating, and publishing Federal statistics. A metro area (1) contains a core urban area of 50,000 or more population and (2) includes one or more counties containing the core urban area. All counties in the MSA have a high degree of social and economic integration (as measured by commuting to work) with the urban core. MSA’s have 5-character ID’s used for CRA and HMDA purposes except when they contain MD’s. An Assessment Area boundary may not substantially overlap a MSA boundary.
4. Micropolitan Statistical Area: a micro area contains an urban core of at least 10,000 (but less than 50,000) population. Each micro area consists of one or more counties and includes the counties containing the core urban area, as well as any adjacent counties that have a high degree of social and economic integration (as measured by commuting to work) with the urban core. Micro areas are part of the state non-MSA areas for CRA Assessment Area purposes. Micro areas have 5-character ID’s that are not used for HMDA or CRA reporting purposes because they are part of the state-wide non-MSA area.
5. Metropolitan Division (MD): the term "Metropolitan Division" is used to refer to a county or group of counties within a Metropolitan Statistical Area that has a population core of at least 2.5 million. A Metropolitan Division is most generally comparable in concept, and equivalent to, the now obsolete Primary Metropolitan Statistical Area. While a Metropolitan Division is a subdivision of a larger Metropolitan Statistical Area, it often functions as a distinct social, economic, and cultural area within the larger region. Metropolitan Divisions retain their separate statistical identities. Federal agencies will continue to provide detailed data for each Metropolitan Division, just as they did in the past for the Primary Metropolitan Statistical Areas. When an Assessment Area is inside a MSA that contains MD’s a bank may delineate the AA by the entire MSA or each separate MD component. Examiners are required however to breakout Assessment Areas by MD’s for CRA performance evaluation purposes. MD’s have their own 5 character ID which trumps the 5 character MSA ID for CRA and HMDA reporting purposes.
6. Summary:
   
   1. CSA’s are irrelevant for CRA, HMDA and Fair Lending Analysis.
   2. CBSA’s contain Metropolitan Statistical Areas and Micropolitan Statistical Areas.
   1. Metropolitan Statistical Areas are relevant for CRA AA delineation and for HUD EMFI to be applied to determine borrower income class.
   2. Micropolitan Statistical Areas are not relevant for CRA AA or borrower income classification purposes and are considered part of the non-MSA areas in the state in which they are located.
   3. Metropolitan Statistical Areas are important for AA delineation and for borrower income class determination (using the HUD EMFI for the MSA); however,
   1. If the MSA is one of the eleven largest MSA’s it will contain Metropolitan Divisions.
   2. Metropolitan Divisions have separate 5-character identities and HUD EMFI data that must be used to calculate borrower income class.
   3. If an AA contains a MD examiners will breakout performance by MD’s.
   4. Metropolitan Divisions are parts of mega MSA’s and their 5-character ID’s and HUD EMFI’s trump MSA’s for HMDA and CRA purposes.