NAFCU champions for the success of CDFIs and MDIs
As the past few years continue to reshape the nation’s “normal,” some communities are still feeling disproportionate impacts of the pandemic. Because credit unions were created to help working-class Americans have access to safe and affordable financial products, many have relied on their local credit unions for support during these difficult times as they look for ways to get back on their feet.
Credit unions designated as certified community development financial institutions (CDFIs) and minority depository institutions (MDIs) are dedicated to helping low-income and underserved communities gain access to necessary and affordable financial services. In fact, these institutions have provided vital access to capital for underserved Americans for decades.
Jeanne Kucey, President and CEO of JetStream Federal Credit Union, a MDI and CDFI certified credit union, recently testified on behalf of NAFCU before the Senate Banking Committee and highlighted the important role CDFIs and MDIs play in predominantly low-income communities. Kucey outlined the credit union industry’s commitment to serving the communities. She also called for legislative action that would bolster funding and assistance for CDFIs and MDIs to strengthen their support and offerings.
NAFCU also recently called for enhanced transparency and increased communication on pending applications for credit unions seeking CDFI certification. NAFCU Vice President of Regulatory Affairs Ann Kossachev wrote to the Department of Treasury’s CDFI Fund asking that they provide additional resources to address the current CDFI application backlog and to openly communicate with applicants on the reasons behind the delays.
NAFCU also called for increased funding for CDFIs and the Community Development Revolving Loan Fund (CDRLF) for the next fiscal year, expressing that the programs proved their worth throughout the pandemic and additional funding for the CDFI Fund and CDRLF would provide the necessary resources to keep them fully functional in meeting the needs of their communities.
In addition, NAFCU Vice President of Legislative Affairs Brad Thaler recently reiterated NAFCU’s call to Congress to amend the Federal Credit Union Act (FCU Act) to allow all credit unions the ability to add underserved areas to their fields of membership. Currently, the FCU Act limits credit unions to serve a specific and distinct field of membership, and only multiple common bond credit unions have the authority to include underserved communities.
CDFIs often provide educational services, such as credit counseling and homebuyer classes, to help their borrowers use credit effectively and ensure they can keep up with their loan obligations. However, many of the mortgages originated by CDFIs are considered non-conforming and, therefore, the government-sponsored enterprises (GSEs) are unable to purchase these loans.
In response, NAFCU urged the Federal Housing Finance Agency (FHFA) to create a pilot program to allow GSEs to buy such non-conforming loans from CDFIs. The association noted that CDFIs are serving the same communities that the GSEs aim to serve through their statutorily mandated missions. In addition, NAFCU joined with Inclusiv in a letter to the Department of Housing and Urban Development (HUD) requesting that they offer tailored training and other resources to assist CFDIs and MDIs in becoming Federal Housing Administration (FHA) approved lenders. The association will continue to partner with Inclusiv, whose membership is solely CDFI and MDI credit unions, to ensure that credit union concerns and priorities are heard and acted upon.
NAFCU will continue to advocate on behalf of CDFI and MDI certified credit unions, as they play an integral role in providing resources to underserved and minority constituencies.
