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CDFI certification application updated, live webinar on Dec. 13

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NEWS:    The Treasury Department last week released a revised Community Development Financial Institution (CDFI) certification application, more than a year after the CDFI Fund initiated a certification blackout as it proposed changes to the process and application. 

Thanks to input from stakeholders, the revised application addresses many, but not all, of the concerns raised by those in the financial services industry after the revisions were first proposed. The League joined other trade groups and credit unions in critiquing the CDFI Fund’s original proposal to update the application. We wrote that the proposal included some provisions to help the Fund ensure that CDFIs have strong community development missions and offer responsible products and services; however, other provisions would not only have made it impossible for some fully eligible regulated depositories to recertify but would also have substantially increase the compliance cost of being a certified CDFI.
 
The following material is from an early analysis of the new CDFI application by CUNA. 

What was changed

Many of the credit union movement’s most important requests were addressed, including:

  • Allowing for lenders to offer balloon payment mortgages if 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; and
  • 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.
Other important changes were made as well, including allowing for a longer timeframe to review and execute the CDFI Certification Agreement; providing some guidance (albeit in the Overview document and not the application itself) on what overdraft and insufficient funds fees the Fund considers irresponsible; defining mortgages in a limited way that preserves a lot of credit union flexibility; 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. 

 

What remains a concern

With that said, much of the application is still overly complex and burdensome and  displays a lack of familiarity with financial institutions. Further, credit unions with African American and Hispanic Other Targeted Populations will have to collect actual race and ethnic data using HMDA procedures. The Fund has indicated in meetings that it will work with other federal financial regulators to ensure this can be done. Finally, the CDFI Certification Agreement was not released with the other items. 

Deadlines & the grace period

Credit unions that are currently CDFI certified have until Dec. 20, 2024 to apply for recertification under the new application. The window for recertification by current CDFIs opens on Aug. 1, 2024. The Fund has indicated that all applications submitted by Dec. 20, 2024 will be reviewed by Dec. 20, 2025. While the recertification application is pending, CDFI credit unions will retain their certification. Currently certified CDFIs still must submit the ACR under the current 90 days deadline, until they are recertified under the new application. Once they are recertified under the new application, they will follow the new ACT submission process.

If a credit union wishes to obtain a recertification determination earlier, the Fund is offering a limited 700 slots to voluntarily recertify before the general submission deadline of Dec. 20, 2024. Credit unions interested in recertifying early must indicate their intention to do so before February 1, 2024, and submit their application between May 31, 2024 and July 31, 2024. These credit unions will receive determinations before Oct. 31, 2024. If a credit union submits early and is denied recertification, they will not lose their certification until Dec. 20, 2024. They can reapply in the general application submission window before that date and retain certification while they await determination on that application.
 
Credit unions not currently certified can apply as soon as AMIS reopens CDFI Certification Application on Dec. 20, 2023. The CDFI Fund will allow these credit unions to also apply for grants under the CDFI Program and the Native CDFI Assistance Program during the coming 2024 grant round. The CDFI Fund will determine the credit union’s CDFI Certification application before announcing awards. Once certified under the new application, CDFI credit unions will be required to submit the new ACR within 180 days of their fiscal year end. 

 

Guidance & webinars from the CDFI Fund

The Fund will conduct a live webinar on Dec. 13th at 12:30 p.m. Central to discuss the live application. It will also resume its monthly CDFI conference calls beginning Feb. 15, 2024 and quarterly ACR calls. 

Here are links to materials published by the CDFI Fund:

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