Mellin: Expanding market methodologies will further empower CDFI credit unions

To further empower CDFI credit unions to serve target markets, the list of pre-approved target market methodologies should be expanded, said William J. Mellin, New York Credit Union Association president/CEO, in a letter sent to Jodie Harris, CDFI Fund director, on Monday.

Lending in low-income and other target markets is often complicated by issues of data availability, thereby harming low-income communities and communities of color, and the list of pre-approved methodologies should be expanded to include other targeted populations (OTP) and low-income targeted populations (LITP), the letter states.

Specifically, pre-approved methodologies should be expanded to:      

  • apply investment area criteria to census block groups to allow more CDFIs to certify using a single investment area target market;
  • allow the use of low-income census tracts and block groups, identified using existing investment area criteria, as a geographic proxy for LITP;
  • accept the use of modeled household income data from qualified third-party vendors for LITP verification; and
  • accept well-documented statistical proxies for individual race and ethnicity data such as the Bayesian statistics touted by the CFPB.

“Additionally, as the CDFI Fund works to finalize its minority lending institution designation, it should add a new, pre-approved OTP target market that includes Asian Americans as well as Pacific Islanders who do not reside in the Pacific Islands to better serve communities affected by disproportionate adverse decisions,” Mellin stated.

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