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Treasury announces updates to CDFI certification application
The Treasury Department Thursday released a revised CDFI certification application after delays that have set back financial institutions. The CDFI Fund initiated a certification blackout period Oct. 1, 2022, as it proposed changes to the process and application.
“NAFCU appreciates the CDFI Fund finalizing its application for certification and incorporating several recommendations from CUNA and NAFCU. While credit unions can now finally access a certification application for the critical CDFI Fund to unleash financial resources to communities that face immense economic struggles, we still have significant concerns with several aspects of the application,” said NAFCU President and CEO Dan Berger. “There are more than 530 credit unions and cooperatives that are CDFI certified, serving more than 20 million people. NAFCU looks forward to continuing to work with the CDFI Fund and is ready to jump in and help any member credit union to ensure underserved communities can thrive and have financial support available.”
“We thank the fund for taking credit union concerns seriously, and are relieved that many important changes were made. Updating the certification standards was a significant challenge, and a necessary step to protect the value of the certification and the low-income and underserved populations at the heart of the mission of both the Fund and CDFI credit unions,” said CUNA President/CEO Jim Nussle.
“CUNA and NAFCU thank the fund for taking the time to thoroughly consider stakeholder feedback. However, there is more work to be done as concerns regarding Target Market methodologies were not addressed. The CDFI Fund remains one of the most effective ways to multiply and leverage federal funds into positive outcomes to communities, and CUNA, NAFCU, and CDFI credit unions look forward to continued work with the Fund to ensure credit unions doing the work of reaching historically redlined, rural, and under-resourced communities are able to continue doing so.”
The CDFI Fund received more than 250 comment letters in response to the revisions proposed to the CDFI Certification Application and 40 comment letters for the Annual Certification and Data Collection Report (ACR) and Transaction Level Report (TLR). The comments were thoroughly reviewed and considered by the Fund, as mandated by the Paperwork Reduction Act (PRA).
Highlights in the revised application include:
- Providing 30 days for credit unions to execute and return the CDFI Certification Agreement, rather than 10;
- Allowing for lenders that offer balloon payment mortgages if it is responsibly designed;
- Broadening the definition of “development services” to better recognize the effectiveness of coaching, online training, youth programs, and other services offered by credit unions;
- Altering the Financial Interest Policy to ensure that officers of credit union governing boards who hold loans in the credit union are not excluded from serving as a source of accountability; and
- Recognizing that staff and not just executives of mission-driven organizations that serve a target market are appropriate sources of accountability to CDFI credit unions
NAFCU award winning advocacy team consistently raised concerns related to the delays to the CDFI Fund’s certification application, including a meeting with House Financial Services Committee Ranking Member Maxine Waters, D-Calif., and senior Treasury Department officials. Additionally, Sens. Steve Daines, R-Mont., Mark Warner, D-Va., Mike Crapo, R-Idaho, and Raphael Warnock, D-Ga., introduced the CDFI Fund Transparency Act in the summer following a companion bill that was previously introduced in the House.
The CDFI Fund’s Awards Management Information System (AMIS) will reopen only for non-certified organizations to apply for CDFI certification starting Dec. 20, 2023. Applications for currently certified CDFIs to reapply must be submitted between Aug. 1 and Dec. 20, 2024. Failure to do so will result in losing CDFI Certification.
The association will continue to engage the CDFI Fund, lawmakers, and credit union members both independently and as part of the CDFI Fund Coalition.