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NAFCU, Inclusiv write to NCUA on CDFI certification, OTP standard
NAFCU Senior Vice President of Government Affairs Greg Mesack joined Inclusiv Executive Vice President Pablo DeFilippi in a letter to NCUA Chairman Harper Thursday requesting assistance with the Community Development Financial Institution (CDFI) certification process based on the Other Targeted Population (OTP) standard.
The letter emphasizes that in order to become a certified CDFI under current CDFI Fund standards, an entity must direct at least 60 percent of its financial product activities to one or more approved target markets. In this case, OTP- qualifying populations are identified as:
- African-American;
- Hispanic American;
- Native American;
- Native Alaskan, residing in Alaska;
- Native Hawaiian, residing in Hawaii;
- and Other Pacific Islander, residing in other Pacific Islands; along with ADA-qualifying Americans.
Although credit unions have begun utilizing tools that identify said OTP borrowers, many credit unions that have recently submitted OTP data with their CDFI certification application have had their applications placed on an indefinite hold. According to Mesack and DeFilippi, since credit unions have an obligation to serve the people in these underserved markets, “their efforts are being met with skepticism by the CDFI Fund.”
NAFCU on several occasions has urged the CDFI Fund to streamline their certification process and address the current application backlog as it has kept many applicants, including credit unions, waiting for months before they hear from the organization.
“The CDFI Fund is seemingly encouraging institutions seeking CDFI certification to refrain from submitting OTP data if their verification process is not already approved by the Fund,” wrote Mesack and DeFilippi. “This poses a significant problem for several credit unions that may not be able to gain approval for an investment area target market on Accountability grounds, with OTP being their only option for achieving certification.”
Previously, NAFCU and Inclusiv met with Chairman Harper to discuss topics regarding the CDFI Fund. The association has also urged Congress and other agencies including the Treasury Department and the NCUA to work together to address the application backlog by enhancing transparency and communication on pending applications for credit unions seeking CDFI certification.
Read the full letter. NAFCU continues to work with the NCUA and CDFI Fund to help credit unions navigate the CDFI certification process.
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