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Changes to low-income definition urged by CUNA
WASHINGTON (7/1/08)—Changes to a National Credit Union Administration (NCUA) proposal to broaden its low-income designation are needed to better reach those members who benefit most from access to financial services from through low-income designated credit unions, according to the Credit Union National Association (CUNA). In a recent comment letter, CUNA Deputy General Counsel Mary Dunn rtote that CUNA “does not generally object to the change in the definition from one that is based on ‘median household income’ to one that is based on ’median family income,’ as proposed by the agency in April. The NCUA, at the time, pointed out that presently agency regulations describe a low-income family as members whose annual household income falls at or below 80% of the national Median Family Income. That rule does not provide a differential for certain geographic areas with higher costs of living. The proposed change is intended to acknowledge geographical differences. However, CUNA urges the agency to consider some important modifications before adopting a final rule. They include:
* ‘Grandfather’ for existing low-income credit unions should be permanent, not just for five years as in the proposal. NCUA should also include a waiver process that would allow other credit unions on an individual basis to qualify for or retain low-income status to serve areas or individuals who might not technically meet the definition of low-income; * A final rule should be clarified to include state-chartered federally insured credit unions; * The definition should include those whose incomes are at or below 80% of the area or nation’s income standards, even if they do not live in a low-income area; and * NCUA should facilitate the ability of credit unions to determine low-income areas by making appropriate resources available for them on its website.
The low-income designation is considered especially important to credit unions because it determines whether they qualify for subsidies from the Community Development Revolving Loan Fund. For more on the NCUA proposal and to read CUNA’s complete comment letter, use the resource links below.
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