WASHINGTON—Ahead of a Senate Banking Subcommittee hearing to examine how Community Development Financial Institutions (CDFIs) support underserved communities, NAFCU has sent a letter urging increased spending but also calling for a “backlog” to be cleared first.
In its letter to Housing, Transportation, and Community Development Subcommittee Chairwoman Tina Smith (D-MN) and Ranking Member Mike Rounds (R-SD), NAFCU VP-Legislative Affairs Brad Thaler said the trade group appreciates congressional support for the CDFI Fund and the Community Development Revolving Loan Fund (CDRLF), but said NAFCU is also concerned that an application backlog also needs to be cleared to make it easier for credit unions to become a CDFI.
“While Congress is considering support for the CDFI and CDRLF funds, we urge you to ensure that Treasury is given the necessary resources to clear out the current CDFI application backlog,” wrote Thaler. “NAFCU has long been concerned by this backlog, and we would support legislative measures to streamline and modernize the requirements and application process to make it easier for institutions to be approved as a CDFI.”
Call for GSE Change
In addition, Thaler also pointed to the inability for Government Sponsored Entities (GSEs) to purchase non-conforming loans from the CDFI institutions, and reiterated NAFCU’s call for the creation of a separate pilot program for purchase of non-conforming loans from CDFI’s by the GSEs.
“Credit unions that are classified as CDFIs are best situated to originate loans to the communities most in need,” concluded Thaler. “NAFCU believes that one way to help address the widening homeownership gap for minorities would be for the FHFA to permit the GSEs to purchase mortgages like the ones made by CDFIs to their communities through new pilot programs with less stringent purchase criteria in order to facilitate a vibrant secondary market.”