Requests from advocacy groups only the latest in a broader call for simplifying and improving the CDFI Certification process.
Two credit union groups are seeking National Credit Union Administration (NCUA) Chairman Todd Harper’s help in trying to convince Treasury Department officials to speed up the review process for Community Development Financial Institution (CDFI) Certification applications.
The problem is particularly acute in the applications from institutions seeking to serve “Other Targeted Populations (OTP),” Pablo DeFilippi, executive vice president of Inclusiv and Greg Mesack, senior vice president of government affairs at the National Association of Federally-Insured Credit Unions (NAFCU), stated in a joint letter to Harper late last week.
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 Americans qualifying under the Americans with Disabilities Act.
DeFilippi and Mesack wrote credit unions that have recently submitted data demonstrating they serve those populations have had their applications placed on indefinite hold.
“Credit unions have an obligation to serve the people in these underserved markets, but their efforts are being met with skepticism by the CDFI Fund,” they said. “Credit unions are not specifically targeting these populations to achieve certification but given the industry’s increased focus on expanding access to financial services, credit unions are trying to be intentional about serving their diverse markets.”
The Impact on Credit Unions Submitting OTP Data
The pair further told Harper the CDFI Fund is seemingly discouraging institutions from submitting OTP data if their verification process has not already been approved by Fund officials. This, they say, poses a significant problem for some credit unions.
As things stand, they argue, only those Minority Depository Institutions that are already certified will be able to take advantage of the $1.75 billion Congress appropriated to the CDFI program under the Minority Lending Program, while others will not.
“These institutions will likely not be able to access the Minority Lending Program despite their continued work in minority communities and alignment with the CDFI Fund’s mission to expand economic opportunity for underserved people and communities,” the duo wrote.
Not The First Time CDFI Certification Process Has Been Questioned
The letter to Harper followed one sent earlier this year by Ann Kossachev, NAFCU’s vice president of regulatory affairs, asking Treasury Department officials to allocate more resources to addressing the application backlog and to streamline the application process itself.
In a January update, officials from the CDFI Fund said they were adding staff to accommodate the increased requests for CDFI Certification.
“However, adding new staff and then onboarding and providing necessary training takes time,” they cautioned. “This is not an immediate fix but does serve as a long-term solution.”
The fund also said they would no longer be able to provide a definitive timeline for certification decisions. In the past, officials set a goal of rendering their determinations within 90 days after an application was submitted.
To learn more about CDFI eligibility for credit unions, as well as the various award and grant possibilities it could unlock, visit our CDFI Certification page or schedule a free opportunity assessment.