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 

PUBLISHED 

State Partners and CFPB Sue Prehired For Illegal Student Lending Practices

The Consumer Financial Protection Bureau (CFPB) joined with several state attorneys general and a state regulator to take action against Prehired for deceptive marketing and debt collection practices. Prehired operated a 12-week online training program claiming to prepare consumers for entry-level positions as software sales development representatives with “six-figure salaries” and a “job guarantee.” Prehired drove interested applicants to sign an “income share” loan to finance the costs of the program and represented that consumers would pay nothing until they got a high-income job through Prehired. In reality, Prehired deceptively buried terms that required consumers to pay even if they never got a job and, in many cases, unilaterally increased consumers’ required minimum monthly payments without any evidence that they had secured employment or experienced an increase in income. The CFPB is seeking to void the loans and obtain redress for affected consumers and a penalty, which would be deposited into the CFPB’s victims relief fund. The attorneys general from Washington, Oregon, Delaware, Minnesota, Illinois, Wisconsin, Massachusetts, North Carolina, South Carolina, and Virginia joined the action, along with California’s Department of Financial Protection and Innovation. Read more

PUBLISHED 

CFPB Takes Action Against Bank of America for Illegally Charging Junk Fees, Withholding Credit Card Rewards, and Opening Fake Accounts

The Consumer Financial Protection Bureau (CFPB) ordered Bank of America to pay more than $100 million to customers for systematically double-dipping on fees imposed on customers with insufficient funds in their account, withholding reward bonuses explicitly promised to credit card customers, and misappropriating sensitive personal information to open accounts without customer knowledge or authorization. The Office of the Comptroller of the Currency (OCC) also found that the bank’s double-dipping on fees was illegal. Bank of America will pay a total of $90 million in penalties to the CFPB and $60 million in penalties to the OCC. Read more
PUBLISHED

Prepared Remarks of Director Rohit Chopra for the CFPB Hearing on Medical Billing and Collections

“Today, we are talking about an issue that impacts over 100 million Americans – medical debt. As many of you know, the practices used to bill and collect for medical services have tremendous consequences for American consumers. Medical bills are a major financial pain point for Americans, and the fear of cost can be enough to stop some families from even seeking care. National health expenditures account for more than 18 percent of our country’s gross domestic product, with consumers’ out of pocket expenses accounting for a staggering $433.2 billion…” Read more

PUBLISHED CFPB, U.S. Department of Health and Human Services, and U.S. Department of Treasury Launch Inquiry into Costly Credit Cards and Loans Pushed on Patients for Health Care Costs

Public input will bolster agencies’ broad efforts to safeguard consumers against predatory medical debt and collections practices

Today, the Consumer Financial Protection Bureau (CFPB), U.S. Department of Health and Human Services (HHS), and U.S. Department of Treasury (Treasury) launched an inquiry into high-cost specialty financial products, such as medical credit cards and installment loans, that are pushed on patients as a way to pay for routine medical care and which drive up health care costs and medical debt. Today’s request for information builds on CFPB research on medical payment products and medical billing and collections, in addition to other actions by the CFPB and Federal agencies to relieve the burden of medical debt and collections practices. The three agencies seek information about the prevalence of these products, patients’ experiences with them, and health care providers’ incentives to offer these high-cost products to patients, which may include avoiding the insurance claims process and financial assistance programs. The CFPB will use the public input as it considers ways to address the patient harms caused by these specialty financial products. Read more

PUBLISHED CFPB to distribute more than $3.5 million to consumers who were charged illegal fees to reduce or eliminate their federal student loans

Timemark, Inc. collected illegal advance fees from more than 7,100 consumers seeking to renegotiate, settle, reduce, or alter the terms of their loans. This month, more than 7,100 people who were charged illegal advance fees by Timemark, Inc. to renegotiate, settle, reduce, or alter the terms of their federal student loans will receive a check in the mail. Read more