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Regulations implementing the 1994 Riegle Community Development and Regulatory Improvement Act, as drafted by the CDFI Fund, define Target Population as, “…individuals, or an identifiable group of individuals, who… lack adequate access to Financial Products and Services.” In a twist of utter hypocrisy, in October 2022, the CDFI Fund itself called for all Disabled Americans to qualify as Target Populations. The CDFI Fund was for the disabled getting access to financial products from CDFIs before they were against it.
Questions are now surfacing about whether the CDFI Fund’s decision violates the Americans with Disabilities Act (“ADA”) which was signed into law in 1990 and makes it unlawful to discriminate against a person based on that person’s disability. The ADA defines an individual with a disability as, “…a person who has a physical or mental impairment that substantially limits one or more major life activities, a person who has a history or record of such an impairment, or a person who is perceived by others as having such an impairment.”
The CDFI Fund’s decision now puts CDFIs at risk of losing their certification if they lend to Disabled veterans or other Disabled Americans. This is the very thing the ADA was adopted to prevent. For instance, a CDFI who makes 60% of their loans to Target Market borrowers can be decertified if they make a single additional loan to the Disabled, thereby dropping their Target Market lending to under 60%. By requiring CDFIs to make 60% of their loans to borrowers designated by the CDFI Fund as Target Market loans, CDFIs are being forced to choose between serving the Disabled (including Disabled veterans) or maintaining their CDFI certification. In fact, the CDFI Fund is threatening to decertify a CDFI that followed the CDFI Fund’s call to increase access to capital to the Disabled. The CDFI Fund simply needs to accept the very research they themselves have published which clearly demonstrates that the Disabled meet the statutory requirements to qualify as Target Market borrowers.
By making loans to Disabled veterans, a CDFI can fall below the minimum percentage of loans it must make to its Target Markets. In fact, this is not just a hypothetical issue. America’s largest non-bank CDFI lender, The Change Company (“Change”), is facing this risk directly. Change is passionate about leveling the playing field for homeownership by serving Black, Latino, low income and other underserved borrowers including the Disabled and Disabled veterans. Due to Change’s passion to serve Disabled veterans, Change is being forced by the CDFI Fund to choose between lending to disabled veterans and losing its CDFI certification.
“It is a sad day when the Disabled are denied access to programs designed to serve those underserved by traditional bank lenders. It is clear that the Disabled face financial discrimination and exclusion from private lending due to their disabilities,” stated Reverend L.B. Tatum, Pastor of Emmanuel Lutheran Church in North Hollywood, CA and a Naval veteran, “The CDFI Fund was formed to level the playing field for all Americans including Disabled Americans and American veterans who became Disabled in combat. The ongoing exclusion of the Disabled from the CDFI program is inexcusable.”
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