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NAFCU, Inclusiv discuss CDFIs as FHA lenders with HUD Secretary Fudge
NAFCU, Inclusiv met with HUD Secretary Marcia Fudge Wednesday to discuss ways community development financial institutions (CDFI) and minority depository institutions (MDI) certified credit unions can help bolster access to affordable mortgage credit for low- and moderate-income and first-time homebuyers, as well as other topics related to appraisal bias and energy efficiency.
In addition to Fudge, Inclusiv and NAFCU, participants included President of Ginnie Mae Alanna McCargo and Principal Deputy Assistant Secretary for the Federal Housing Administration (FHA) Lopa Kolluri.
During the meeting NAFCU and Inclusiv urged HUD to conduct a study to determine the level of participation of CDFIs in FHA loan insurance programs and work collaboratively with CDFI and MDI credit unions to streamline the approval process for FHA lenders. Both groups also suggested that HUD consider an FHA lending focused pilot program for CDFIs and MDIs and allow the use of contract underwriters for FHA loans. Fudge expressed support for working together with credit unions and CDFIs to help bolster access to mortgage credit for underserved communities.
On appraisal bias, a topic NAFCU has been heavily engaged in, the group discussed the lack of standardization among appraisers and throughout the entire appraisal process, and its effects on borrowers. NAFCU called on HUD to promote consistency among appraisers and offer support for alternative appraisal processes such as appraisal bifurcation, desktop appraisals, and exterior only appraisals, which can help with flexibility and something the association has strongly advocated for.
The groups also discussed the Biden Administration’s interagency task force, Property Appraisal and Valuation Equity’s (PAVE), action plan to tackle home appraisal bias as part of a larger effort to address the racial wealth gap, announced last month.
In addition, the groups discussed how low- and moderate-income communities and communities of color tend to pay disproportionately high energy costs. NAFCU and Inclusiv urged HUD to consider offering an easy access national loan reserve fund for community development credit unions lending to underserved populations for clean energy and energy efficiency projects.
NAFCU continues to engage HUD and other agencies to ensure credit unions are given the tools they need to support consumers throughout the home-buying process.