WASHINGTON— The Defense Credit Union Council (DCUC) is now sharing its concerns with the Senate over the new CDFI Target Market assessment methodologies that have been proposed.
The letter to the Senate is similar to that the DCUC recently sent to the House, in which is also shared similar concerns, as CUToday.info reported here.
In a letter to leaders of the Senate Committee on Banking, Housing, and Urban Affairs’ Chairman Sherrod C. Brown (D-OH) and Ranking Member Tim E. Scott (R-SC), DCUC emphasized that military installations are often located within lower-income communities and/or rural areas that tend to lack common public infrastructure.
Many Families ‘Struggling’
“Additionally, military personnel, especially the younger, lower-ranked ones who make up the bulk of our nation’s military, typically meet the threshold for the CDFI Fund’s Low Income Targeted Population levels under the established criteria,” DCUC said.
In its letter, DCUC stressed many military families are currently struggling with food insecurity, a lack of adequate spouse employment options, access to affordable childcare, and a lack of affordable housing. Also, the majority are stationed further away from their families’ support.
“Given these issues, it’s evident credit unions hold an important role in assisting military members with their daily financial needs,” DCUC said.
HMDA Analysis
DCUC noted that CUNA has supplied an analysis of the 2021 Home Mortgage Disclosure Act (HDMA) data which reveals how imperative defense credit unions’ services are to their military and veteran members’ overall financial well-being.
Among the data points stressed by DCUC and drawn from the CUNA report:
- Applicants for first mortgage originations at military credit unions reflected average income of $130,189 – well below the $169,164 average at US commercial banks
- Military credit union first mortgage loan amounts averaged $282,486 – well below the $327,840 average at US commercial banks
- Overall, 10.8% of military credit union first mortgage loan originations were to African Americans - over double the 4.8% share of total originations at commercial banks
- Overall, 10.2% of military credit union first mortgage loan originations were to Hispanic Americans – nearly double the 6.6% share of total originations at commercial banks
A ‘Key Driver’
“The data highlights how important credit unions’ dedication to supporting the housing needs among lower-income and minority communities is, with homeownership being a key driver of wealth and intergenerational wealth transfers,” DCUC said.
Scheduled to take effect in April 2023, the new CDFI Target Market assessment methodologies “conflict with legal restrictions on obtaining racial, disability, or other demographic data per the Equal Credit Opportunity Act and Regulation B,” DCUC argued.
As such, this would preclude defense credit unions from legally obtaining this data,” DCUC said.
DCUC further stated other options are available for satisfying legal requirements are “very burdensome and costly,” especially for smaller credit unions.
“The result of the New CDFI Target Market assessment methodologies would directly limit defense credit unions’ abilities to maintain or become CDFI-certified and obtain Federal funding for their military and veteran members,” DCUC said.
Review Requested
DCUC asked the Committee review these methodologies and evaluate if a legislative fix is necessary.
“These downstream effects on the military community make this unacceptable for those who wear our nation’s cloth,” wrote President/CEO Anthony Hernandez. “Defense credit unions are responsible lenders and have always offered quality products and services to keep predatory lending away from our military. This commitment to doing right by its members is why our member credit unions are dedicated to all DoD personnel on the installation.”
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