CDFI Fund Impact Blog: Positioning the Capital Magnet Fund for Impact and Innovation

Since its inception in 2008, the Capital Magnet Fund (CMF) has awarded nearly $1.1 billion in funding to create and preserve affordable housing for Low-Income families and economically distressed communities. Through the program, the Community Development Financial Institutions Fund (CDFI Fund) awards competitive grants to Certified Community Development Financial Institutions (CDFIs) and non-profit housing organizations to develop, rehabilitate, preserve, and purchase affordable housing, particularly housing targeted to Low-, Very Low-, and Extremely Low-Income families.

Resources provided by CMF have played an important role in leveraging private and public capital to finance a substantial number of affordable housing units. At the end of fiscal year (FY) 2022, CMF Award Recipients had collectively financed the completion of 37,650 affordable rental housing units and more than 5,500 affordable homeownership units and leveraged an additional $7.9 billion in capital (including $6.7 billion in private capital). Roughly two-thirds of all CMF-financed units are location in Areas of Economic Distress1 or High Housing Need Areas2.

There is even more predicted to come. Over 52,000 units of additional affordable rental housing units are either under development or construction and will be completed in the next few years.3

Over the past seven rounds of the CMF program, the CDFI Fund has learned how vital these resources are and the positive impact the program has in financing much needed affordable housing. The CDFI Fund has also learned that there may be ways for the CMF program to improve outcomes, reduce burden on CMF Applicants and CMF Award Recipients, and to be more responsive to changing market dynamics and trends in the affordable housing field.

To this end, the CDFI Fund recently published a Request for Information (RFI)  in the Federal Register asking for input on a variety of subject areas related to CMF program operations, priorities, and compliance. Specifically, the CDFI Fund is seeking information on subject matters such as:

  • aligning CMF with other federal affordable housing assistance programs;
  • CMF Award commitment deadlines;
  • CMF leverage requirements;
  • program income, loan loss reserve and loan guarantee rules;
  • manufactured housing, assisted living, and economic development activity guidelines; and
  • homeownership purchase price limitations.

Comments are due September 5, 2023. CDFIs, non-profit housing organizations, as well as affordable housing stakeholders are all encouraged to review the RFI and provide comments that could be vital in setting the future path of this key affordable housing finance program.

Courtesy of Andrew Schlack, Community Development Financial Institutions Fund United States Department of The Treasury
Andrew Schlack is the Program Manger for the Capital Magnet Fund

1 An Area of Economic Distress is a census tract: (a) Where at least 20% of households that are Very Low-Income (50% of AMI or below) spend more than half of their income on housing; or (b) that are designated Qualified Opportunity Zones under 26 U.S.C 1400Z–1; or (c) that are Low-Income Housing Tax Credit Qualified Census Tracts; or (d) where greater than 20% of households have incomes below the poverty rate and the rental vacancy rate is at least 10%; or (e) where greater than 20% of the households have incomes below the poverty rate and the homeownership vacancy rate is at least 10%; or (f) are Underserved Rural Areas, as defined in the CMF Interim Rule (as amended February 8, 2016; 12 C.F.R. Part 1807)

2 A High Housing Need Area is a census tract that either: (a) has Very Low-Income renters paying more than half their income for rent; (b) are high poverty neighborhoods with high vacancy; or (c) are Underserved Rural Areas, as defined in 12 C.F.R. § 1807.104. Note that “Area of Economic Distress” replaced “High Housing Need Area” beginning with the FY 2017 CMF funding round.

3 CDFI Fund, Agency Financial Report, Fiscal Year 2022,
https://www.cdfifund.gov/sites/cdfi/files/2023-01/CDFI_Fund_FY22_AFR_FINAL508.pdf 

A Virtual Public Meeting of the CDFI Fund’s Advisory Board will be Held on February 28, 2023

The Community Development Financial Institutions Fund (CDFI Fund) is convening a meeting of the Community Development Advisory Board (the Advisory Board) from 2:00 to 4:00 p.m. Eastern Time on Tuesday, February 28, 2023. This meeting will be conducted virtually.

The function of the Advisory Board is to advise the Director of the CDFI Fund on the policies regarding the activities of the CDFI Fund. The Advisory Board does not advise the CDFI Fund on approving or declining any particular application for monetary or non-monetary awards.

Please use the following link to view the official meeting notice, which is being released in advance of its publication in the Federal Register on February 9, 2023.

Accessing the Virtual Meeting

This virtual meeting of the Advisory Board is open to the public and free of charge. Members of the public who wish to view this virtual meeting will be required to register upon entry into the virtual meeting.

Viewing this virtual meeting requires the use of WebEx. Please install the WebEx Event Manager prior to the meeting. To download the Event Manager, see the instructions on the Webex Downloads page.

Access Details:

Agenda

The Advisory Board meeting will include a report from the CDFI Fund Director on the activities of the CDFI Fund since the last Advisory Board meeting, particularly the status of the CDFI Certification Application review process. In addition, there will be a discussion regarding two newly formed subcommittees.

Questions

Any questions can be directed to Bill Luecht in the Office of Legislative and External Affairs by calling (202) 653-0322 or via e-mail at [email protected].

The tech giant is working with fintech CNote to help underserved communities.

The multinational technology company Apple, maybe best known for the iPhone, announced Thursday that it is working with fintech company CNote to deploy $25 million of its own money into community development financial institutions (CDFIs), low-income designated credit unions and minority depository institutions (MDIs).

According to a statement, the $25 million infusion is part of Apple’s “broader Racial Equity and Justice Initiative, an effort to address systemic racism in America and expand opportunities for communities of color.”

Apple is using the fintech company CNote to disperse the funds to several credit unions and community banks across the country. According to CNote, the credit unions receiving the funds include the following:

  • ANECA Federal Credit Union in Louisiana;
  • Education Credit Union in Texas;
  • Hope Credit Union, which serves Alabama, Arkansas, Louisiana, Mississippi and Tennessee;
  • Kaua’i Federal Credit Union in Hawai’I;
  • Latino Community Credit Union in North Carolina; and
  • Self-Help Federal Credit Union with locations in California, Illinois, Washington and Wisconsin.

“We’re committed to helping ensure that everyone has access to the opportunity to pursue their dreams and create our shared future,” Lisa Jackson, Apple’s vice president of Environment, Policy and Social Initiatives, said. “By working with CNote to get funds directly to historically under-resourced communities through their local financial institutions, we can support equity, entrepreneurship and access.”

“Corporations have an enormous opportunity to help communities across the U.S. thrive by changing the way they manage their cash reserves, and we’re excited to see Apple at the forefront of this emerging trend,” Catherine Berman, CEO of CNote, said. “Through our platform, we have already started moving Apple deposits into low-income communities and communities of color.”

According to CNote, the company has already deployed an initial round of Apple’s deposits to those institutions.

Article “Apple Pumps $25 Million Into Credit Unions & MDIs” Courtesy of Michael Ogden, Credit Union Times

(Sept. 17, 2021) A new fund designed to help banks serve low-income and minority communities will count Microsoft and Truist Financial Corp. – the sixth largest U.S. bank – as its anchor investors, the FDIC announced this week.

The FDIC established the Mission-Driven Bank Fund (MDBF), it said, to channel private capital and other resources to minority depository institutions (MDIs) and community development financial institutions (CDFIs). “MDIs and CDFIs are banks, savings banks, and savings associations that provide critically needed capital and financial services to minority, lower income, and rural communities,” the FDIC said.

Investments in the fund, the FDIC has said, would assist MDIs and CDFIs to (among other things) raise capital necessary to serve communities; weather economic downturns; attract technical expertise; and acquire and use technology.

Also joining as a “founding investor” in the fund is Discovery, Inc., a U.S. multinational mass media factual television company, according to its own description. The three groups’ investment would total $120 million; more investments are expected, the FDIC said.

The “anchor investors” and founding investors were selected, the agency has said, through a competition to counsel the fund’s investing. Under the rules of the competition, the investors were required to have experience managing investment funds and with prior work with MDIs and CDFIs, as well as a “deep understanding of the communities they serve.”

The MDBF has been in development by FDIC since last November, when the agency announced it was looking for investors in the fund. The agency said then that it would play no role in fund management or individual investment decisions of the fund. However, it noted it would continue to “assess the alignment of the Fund’s on-going operations with its purpose of assisting Mission-Driven Banks.”

LINK:

FDIC Launches Mission-Driven Bank Fund

(Aug. 27, 2021) Credit unions seeking certification as community development financial institutions (CDFIs) can apply for NCUA’s streamlined qualification process between Sept. 12 and Oct. 15, the agency said this week.

The CDFI certification is open only to federally insured credit unions that hold the agency’s low-income credit union designation. Those certified are eligible to apply for financial and technical assistance awards from the Treasury CDFI Fund to support their work in low-income and underserved people and communities.

To qualify for the streamlined process, low-income-designated credit unions must register in the NCUA’s CyberGrants system and complete an online participation form. The agency said its Office of Credit Union Resources and Expansion will review each credit union’s products, services, and other indicators to determine whether the credit union qualifies for the streamlined certification application.

Qualified credit unions will be given the information they need to complete and submit the streamlined certification application to the CDFI Fund, the NCUA said. The CDFI Fund will make the final certification decisions.

LINK:

Streamlined CDFI Application Qualifying Round Opens Sept. 12

(May 14, 2021) The small-dollar loan program of the Treasury’s Community Development Financial Institution (CDFI) Fund related to credit unions is the subject of a webinar planned for May 27 by the CDFI and NCUA. The one-hour event will describe the program and discuss eligibility of permissible uses of funds through the program, NCUA said in a release. It added that credit unions that are not certified as CDFIs may still be eligible for the program through partnerships with CDFIs or any federally insured depository institution whose primary mission is serving targeted investment areas … Federal financial institution regulators – including NCUA (likely Board Chairman Todd Harper) — are due to testify next Wednesday (May 19) before the House Financial Services Committee in an oversight hearing; the session gets underway at 10 a.m. (and will be streamed, live, via the Internet) … Credit union and banking trade associations this week wrote in opposition to legislation aimed at reversing a Supreme Court decision clarifying that a business engaged in non-judicial foreclosure proceedings is not a debt collector. The Non-Judicial Foreclosure Debt Collection Clarification Act (H.R. 2547), a bill that would reverse the 2019 decision in Obduskey v. McCarthy and Holthus LLP, which clarified that entities enforcing a security interest, without also seeking repayment or deficiency judgement, generally do not qualify as debt collectors under the Fair Debt Collection Practices Act (FDCPA). The groups contend that the bill would “disrupt the choices states have made in structuring their foreclosure regimes, imposing unnecessary costs and delay to the enforcement of real property interests and subsequently increasing the cost of credit.”

LINKS:
NCUA, CDFI Fund to Cohost Webinar on Small-Dollar Loan Program