Question PM15 in the revised Certification Application asks whether an Applicant originates, purchases interests in, offers, arranges, markets, or services any consumer loan products (including credit cards and purchased loans) that allow for an APR in excess of 36% when that rate is calculated using the MAPR (rather than TILA) standard. If any of the consumer loan products of the Applicant or its Affiliates, including a PAL, allow for a MAPR in excess of 36%, those loans must meet a set of additional standards (see Question 18) to be permissible for purposes of CDFI Certification.

For purposes of CDFI Certification, the CDFI Fund does not explicitly prohibit fees or premiums for credit life insurance, credit-related ancillary products, or any other fee included in the calculation of MAPR. However, if the premium or fee charged would result in a MAPR in excess of 36% for any of the Applicant’s consumer loan products, the Applicant must meet a set of additional consumer protection standards (see Question 18) for such lending to remain eligible for Certification.

No. PM15.1 and PM 16.1 ask Applicants that offer consumer and/or small business loans with rates in excess of 36% to indicate the current highest allowable rate that the Applicant charges on any of the Applicant’s consumer and/or small business loan products. This data is collected for information purposes and does not affect the eligibility of the Applicant at this time.

If a Certified CDFI that has attested it does not offer consumer or small business loans that allow for an APR in excess of 36% later determines that a transaction’s APR exceeds 36%. it must inform the CDFI Fund of the misreported information through an AMIS Service Request. The CDFI may remain eligible for CDFI Certification without having to meet the additional conditions for consumer loans above 36% provided:

Question PM19 asks a series of questions related to the consumer protection features of an Applicant’s covered mortgage loan products. For purposes of this question PM19, a covered mortgage loan product is limited to a consumer credit transaction that is secured by a lien on a single-family, owner-occupied residence other than:

No, the modification of a borrower’s mortgage loan to include interest-only payments to keep a borrower in their home does not affect an Applicant’s eligibility for CDFI Certification.

Question PM19.2 asks Applicants whether they offer covered mortgage loans that include interest-only payments. If Yes, the Applicant is not eligible for CDFI Certification. However, the scope of this question excludes any transaction made for the purpose of foreclosure avoidance or prevention.

PM19.3 asks whether an Applicant offers covered mortgage loans that include balloon payments, i.e., a payment that is more than two times a regular periodic payment. If yes, the Applicant must indicate:

No, an Applicant that offers adjustable-rate mortgages with a rate that may adjust in less than five years may do so and remain eligible for CDFI Certification so long as it underwrites the mortgage at no less than the maximum rate permitted by the loan in the first five years. For examples of how to determine a mortgage loan product’s maximum interest rate during the first five years, see CFPB’s official interpretation of Paragraph 43(e)(2)(iv) of 12 CFR § 1026.43.

Question PM19.6 asks whether an Applicant verifies the income or assets of the borrower of a covered mortgage loan product. For purposes of CDFI Certification eligibility, an Applicant that offers covered mortgage loan products must verify the borrower’s income or assets using third-party records that provide reasonably reliable evidence of the borrower's income or assets. The Applicant may verify the consumer's income using a tax-return transcript issued by the Internal Revenue Service (IRS).

Yes. Question PM21 ask whether an Applicant sells its charged-off consumer or small business debt to debt buyers. An Applicant that sells its charged-off consumer debt – including owner-occupied residential mortgages – or small business debt to debt buyers is ineligible for CDFI Certification.