PART 1807—CAPITAL MAGNET FUND Authority: 12 U.S.C. 4569. Source: 89 FR 53015, June 25, 2024, unless otherwise noted. Subpart A—General Provisions § 1807.100 Purpose. The purpose of the Capital Magnet Fund (CMF) is to attract private capital for and increase investment in Affordable Housing Activities and related Economic Development Activities in every State of the United States, the District of Columbia, or territories of the United States. § 1807.101 Summary. (a) Through the CMF, the CDFI Fund competitively awards grants to Certified CDFIs and qualified Nonprofit Organizations to leverage dollars for: (1) The Development, Preservation, Rehabilitation or Purchase of Affordable Housing primarily for Low-Income Families; and (2) The financing of Economic Development Activities. (b) The CDFI Fund selects Recipients to receive CMF Awards through a competitive Application process. CMF Awards may only be used for Eligible Uses set forth in subpart C of this part. Each Recipient will enter into an Assistance Agreement that will require it to leverage the CMF Award amount and abide by other terms and conditions pertinent to any assistance received under this part. § 1807.102 Relationship to other CDFI Fund programs. Restrictions on applying for, receiving, and using the CMF Awards in conjunction with awards under other programs administered by the CDFI Fund are set forth in the applicable funding notice. § 1807.103 Recipient not instrumentality. No Recipient shall be deemed to be an agency, department, or instrumentality of the United States. § 1807.104 Definitions. For the purpose of this part: Act Affiliate Affordability Period Affordable Housing Affordable Housing Activities Affordable Housing Fund (1) Manages and makes investment decisions for; and (2) Uses to finance Affordable Housing Activities in any combination of debt, grant, or equity investments, which does not include the purchase of stock, securities, or the buy-out of partnership interests; Applicant Application Appropriate Federal Banking Agency Appropriate State Agency Assistance Agreement Capital Magnet Fund (or CMF) Certified Community Development Financial Institution (or Certified CDFI) CMF Award CMF Unit (1) A single residential unit of Housing financed or supported with a CMF Award, rented or owned by a Family, with dedicated kitchen and bath facilities that meets the requirements of subparts D and E, as applicable; or (2) A single-room occupancy (SRO) unit, a group home, or an assisted living facility with shared common kitchen and bath facilities accompanied by an individual lease for each tenant that meets the requirements of subparts D and E of this part; Committed for Use Community Development Financial Institutions Fund (or CDFI Fund) et seq.; Community Service Facility Concerted Strategy Control (1) Ownership, control, or power to vote 25 percent or more of the outstanding shares of any class of Voting Securities of any company, directly or indirectly or acting through one or more other persons; (2) Control in any manner over the election of a majority of the directors, trustees, or general partners (or individuals exercising similar functions) of any company; or (3) The power to exercise, directly or indirectly, a controlling influence over the management, credit or investment decisions, or policies of any company; Depository Institution Holding Company Development Direct Administrative Expenses Economic Development Activity Economic Development Activity Fund (1) Manages and makes investment decisions for; and (2) Uses to finance Economic Development Activities in any combination of debt, grant, or equity, which does not include the purchase of stock, securities, or the buy-out of partnership interests; Effective Date Eligible-Income Eligible Project Costs Eligible Uses Extremely Low-Income Family Feasibility Determination Expenses Homebuyer HOME Program et seq.; Homeownership (1) Ownership interest may not merely consist of a right of possession under a contract for deed, installment contract, or land contract pursuant to which the deed is not given until the final payment is made; and (2) Ownership interest is subject to the restrictions on affordability permitted under the Assistance Agreement and this part; mortgages, deeds of trust, or other liens or instruments securing debt on the property; or any other restrictions or encumbrances that do not impair the good and marketable nature of title to the ownership interest; Homeownership Program Housing HUD et seq.; Indian Tribe et seq. Insured CDFI Insured Credit Union et seq.; Insured Depository Institution Investment Period Leveraged Capital Loan Guarantee Loan Loss Reserves Low-Income Low-Income Area (or LIA) Low Income Housing Tax Credits (or LIHTCs) Metropolitan Area Multi-family housing Non-Metropolitan Area Nonprofit Organization (1) Designated as a nonprofit or not-for-profit entity under the laws of the organization's State or Indian Tribe of formation; (2) Exempt from Federal income taxation pursuant to section 501(c)(3) of the Internal Revenue Code of 1986, with the exception of organizations affiliated with Indian Tribes; and (3) Able to demonstrate, as set forth in the NOFA, that a share of its total assets is dedicated to the development or management of affordable housing; Payment Permanent Housing Preservation Presumptively Compliant Presumptive Compliance Program Income Project Project Commitment Project Completion Purchase (1) A Family for Homeownership that meet the qualifications set forth in subparts D and E; or (2) A developer or project sponsor for the acquisition of rental Housing that must meet the qualifications set forth in subparts D and E of this part; Recipient Rehabilitation Revolving Loan Fund (1) Manages and approves lending decisions for; and (2) Uses to finance Affordable Housing Activities and/or Economic Development Activities wherein the repayments on such loans are used to finance additional loans; Risk-Sharing Loan e.g., Rural Area Secondary Market Mortgage (1) Originated by a qualified third party lender as defined in guidance by the CDFI Fund and purchased by the Recipient in 12 months or less from the date of its origination using a CMF Award and evidenced by an agreement that meets subparts C, D and E of this part; (2) For which the source of the origination is not the CMF Award; and (3) That would not have been originated but for the Recipient's Secondary Market Mortgage Purchase; Secondary Market Mortgage Purchase Service Area Single-family housing State State-Insured Credit Union Subsidiary Underserved Rural Area Uniform Administrative Requirements Very Low-Income § 1807.105 Waiver authority. The CDFI Fund may waive any requirement of this part that is not required by law upon a determination of good cause. Each such waiver shall be in writing and supported by a statement of the facts and the grounds forming the basis of the waiver. For a waiver in an individual case, the CDFI Fund must determine that application of the requirement to be waived would not adversely affect achieving the purposes of the Act. For waivers of general applicability, the CDFI Fund will publish notification of granted waivers in the Federal Register § 1807.106 Presumptive Compliance with Other Federal Programs. The CDFI Fund may deem certain other Federal program requirements, designations and/or reporting criteria as being Presumptively Compliant with any of the CMF program requirements set forth herein. Recipients participating in and meeting the program requirements of such designated Federal programs may be deemed compliant with certain CMF program requirements, as provided for in the Assistance Agreement or other CDFI Fund guidance and materials. § 1807.107 Applicability of regulations for CMF Awards. (a) The regulations of this part are applicable for all uncommitted funds from prior CMF Awards issued as of June 25, 2024, as well as all CMF Awards made pursuant to all Notices of Funds Availability published after June 25, 2024. (b) The definition of “Nonprofit Organization” is applicable to any Notice of Funds Availability published on or after January 1, 2026; until that time, the definition of “Nonprofit Organization” in § 1807.104 of the 2016 interim rule remains in effect. Subpart B—Eligibility § 1807.200 Applicant eligibility. (a) General requirements. (1) A Certified CDFI. An entity may meet the requirements described in this paragraph (a)(1) if it is: (i) A Certified CDFI, as set forth in 12 CFR 1805.201; (ii) A Certified CDFI that has been in existence as a legally formed entity as set forth in the applicable Notice of Funds Availability (NOFA); or (2) A Nonprofit Organization having as one of its principal purposes, the development or management of affordable housing. A Nonprofit Organization may meet the requirements described in this paragraph (a)(2) if it: (i) Has been in existence as a legally formed entity as set forth in the applicable NOFA; (ii) Demonstrates, through articles of incorporation, by-laws, or other board- approved documents, that the development or management of affordable housing are among its principal purposes; and (iii) Demonstrates, by providing information described in the Application, NOFA, and/or supplemental information, as may be requested by the CDFI Fund, that a certain percentage, set forth in the applicable NOFA, of the Applicant's total assets are dedicated to the development or management of affordable housing. (b) Eligibility verification. §§ 1807.201-1807.299 [Reserved] Subpart C—Eligible Purposes; Eligible Uses; Restrictions § 1807.300 Eligible purposes. Each Recipient must use its CMF Award for the Eligible Uses described in § 1807.301 so long as such Eligible Uses increase private capital for and increase investment in: (a) Development, Preservation, Rehabilitation, and/or Purchase of Affordable Housing for primarily Extremely Low-Income, Very Low-Income, and Low-Income Families; and (b) Economic Development Activities, as further described in § 1807.403, which stabilize, sustain, or revitalize communities and neighborhoods and must be: located in a Low-Income Area or Underserved Rural Area; undertaken in conjunction with any affordable housing that is authorized as such under applicable local, State or Federal housing program laws, and reasonably available to, physically proximate to, and beneficial to residents of affordable housing. § 1807.301 Eligible Uses. The Recipient must use its CMF Award to finance and support Affordable Housing Activities and/or Economic Development Activities through the following Eligible Uses: (a) To capitalize Loan Loss Reserves; (b) To capitalize a Revolving Loan Fund; (c) To capitalize an Affordable Housing Fund; (d) To capitalize an Economic Development Activity Fund; (e) To make Risk-Sharing Loans; and (f) To provide Loan Guarantees. § 1807.302 Restrictions on use of a CMF Award. (a) The Recipient may not use its CMF Award for the following: (1) Political activities; (2) Advocacy; (3) Lobbying, whether directly or through other parties; (4) Counseling services (including Homebuyer or financial counseling); (5) Travel expenses; (6) Preparing or providing advice on tax returns; (7) Emergency shelters (including shelters for disaster victims); (8) Nursing homes; (9) Convalescent homes; (10) Residential treatment facilities; (11) Correctional facilities; or (12) Dormitories. (b) The Recipient shall not use the CMF Award to finance or support Projects that include: (1) The operation of any private or commercial golf course, country club, massage parlor, hot tub facility, suntan facility, racetrack or other facility used for gambling, or any store the principal business of which is the sale of alcoholic beverages for consumption off premises, or any of the businesses of activities set forth in 13 CFR 120.110(c) through (p), or any other businesses deemed inconsistent with the general purpose the Riegle Community Development and Regulatory Improvement Act of 1994 (12 U.S.C. 4701 et seq. (2) Farming activities (within the meaning of the Internal Revenue Code (IRC) section 2032A(e)(5)(A) or (B)), if, as of the close of the taxable year of the taxpayer conducting such trade or business, the sum of the aggregate unadjusted bases (or, if greater, the fair market value) of the assets owned by the taxpayer that are used in such a trade or business, and the aggregate value of the assets leased by the taxpayer that are used in such trade or business, exceeds $500,000. (c) For each individual CMF Award, the Recipient may not use more than 30 percent of its CMF Award for Economic Development Activities, if such use is approved in its applicable Assistance Agreement. (d) Any Recipient that uses its CMF Award for a Loan Guarantee or Loan Loss Reserves must ensure that loan(s) made pursuant to a Loan Guarantee or Loan Loss Reserves finance Affordable Housing Activities and/or Economic Development Activities. The Affordable Housing resulting from the Recipient's Loan Guarantee or Loan Loss Reserve shall be tracked during the Affordability Period for compliance with the affordability requirements as set forth in subpart D of this part. (e) If loans that are made pursuant to a Loan Guarantee or Loan Loss Reserves are repaid during the Investment Period, the Recipient must use the funds made available by the loan repayment as Program Income as set forth in the Recipient's Assistance Agreement. (f) The Recipient may use its CMF Award for Direct Administrative Expenses or Feasibility Determination Expenses at amounts set forth in the applicable NOFA and corresponding Assistance Agreement. Neither Direct Administrative Expenses nor Feasibility Determination Expenses can be attributable to Eligible Project Costs for a Project. § 1807.303 Authorized uses of Program Income. (a) Program Income earned in the form of principal and equity repayments must be used by the Recipient in the manner further set forth in the Assistance Agreement. (b) Program Income earned in the form of interest payments, and all other forms of Program Income (except for that which is earned as described in paragraph (a) of this section), must be used by the Recipient as set forth in the Assistance Agreement and in accordance with 2 CFR part 200. Subpart D—Qualification as Affordable Housing § 1807.400 Affordable Housing—General. (a) For any amount of the CMF Award used for Affordable Housing Activities, 100 percent of such Eligible Project Costs must be attributable to Affordable Housing, meaning that the Affordable Housing complies with the affordability qualifications set forth in this subpart for Eligible-Income Families. Further, as a subset of said 100 percent, greater than 50 percent of the Eligible Project Costs must be attributable to Affordable Housing that comply with the affordability qualifications set forth in this subpart for Low-Income, Very Low-Income, or Extremely Low-Income Families, or as further set forth in the applicable NOFA and/or Assistance Agreement. (b) Affordable Housing must be Permanent Housing. (c) All the occupants of the Affordable Housing must not be full-time students unless they are: (1) Married students who file a joint tax return; (2) Students who receive assistance under Title IV of the Social Security Act; (3) Students enrolled in a job training program; (4) Students who are single parents with children who are their dependents, as defined in IRC sec. 152; (5) Students who previously were part of a foster care program; or (6) Meet other criteria specified by the CDFI Fund. § 1807.401 Affordable Housing—Rental Housing. To qualify as Affordable Housing, each rental Multi-family housing Project financed with a CMF Award must have at least 20 percent of the units rent-restricted to any combination of Low-Income, Very Low-Income, or Extremely Low-Income Families and must comply with the rent limits as set forth in the applicable NOFA and Assistance Agreement in any CMF funding round. The CDFI Fund may require a greater percentage of the units per Project to be income-targeted and/or require a specific targeted income commitment in any given CMF round, as set forth in the applicable NOFA and Assistance Agreement. (a) Rent limitations. (b) Nondiscrimination against rental assistance subsidy holders. (c) Initial rent schedule and utility allowances. (d) Periods of affordability. (e) Standard lease terms and conditions. (f) Tenant income determination. (2) One of the following two definitions of “annual income” must be used to determine whether a Family is income-eligible: (i) Adjusted gross income as defined for purposes of reporting under Internal Revenue Service (IRS) Form 1040 series for individual Federal annual income tax purposes; or (ii) Annual Income as defined at 24 CFR 5.609 (except that when determining the income of a homeowner for an owner-occupied Rehabilitation Project, the value of the homeowner's principal residence may be excluded from the calculation of “Net Family Assets,” as defined in 24 CFR 5.603). (3) The CDFI Fund reserves the right to deem certain government programs, under which a Family is a recipient, as income eligible for purposes of meeting the tenant income requirements under this section. (g) Over-income tenants. (2) The maximum rent for tenants whose incomes no longer qualify is either 30 percent of the Family's annual income, or the amount payable by the tenants under State or local law, whichever is less; however, tenants whose income exceeds the Eligible-Income level are not required to pay rent in excess of the market rent for comparable, unassisted units in the neighborhood. (3) If the income of a tenant of a CMF Unit no longer qualifies, the Recipient may designate another unit within the Project as a rent-restricted replacement unit that meets the affordability qualifications for the same income category as the original unit, as further set forth in the Recipient's Assistance Agreement. If there is not an available replacement unit, the Recipient must fill the first available vacancy with a tenant that meets the affordability qualifications for the same income category of the original unit as necessary to maintain compliance with the CMF requirements and the Assistance Agreement. § 1807.402 Affordable Housing—Homeownership. (a) Purchase with or without Rehabilitation. (i) Single-family housing. (ii) Purchase price limits. (iii) Qualifying Homebuyer. (iv) Eligible-Income requirements. (v) Periods of affordability. (vi) Resale. (A) In the event the qualifying Family sells the Housing in five years or less from the date of Purchase, the Housing must be sold to an Eligible-Income Family meeting the qualifications set forth in § 1807.402. Otherwise, the CMF Award investment must be recouped by the Recipient and the Housing replaced with a replacement unit to satisfy the affordability requirement for the remainder of the Affordability Period. If the Housing is replaced, the replacement unit must be sold to an Eligible-Income Family and must also meet the qualifications set forth in § 1807.402. (B) In the event the qualifying Family sells the Housing any time after five years from the date of Purchase but before the end of the Affordability Period, the Housing must either be sold to a new Eligible-Income Family or, if the Housing is not sold to an Eligible-Income Family, the CMF investment must be recouped as Program Income in a proportional amount from net sale proceeds, as further set forth in the Assistance Agreement. If the Housing is not sold to an Eligible-Income Family after the five-year anniversary of the Purchase date and the Recipient recoups a proportional amount of the CMF Awards as Program Income, the Recipient is not required to replace the sold Housing with a replacement unit. (2) The Recipient may design and implement its own recoupment, replacement, and/or resale strategy, subject to the requirements of § 1807.402(a)(1)(vi) to maintain compliance with the CMF requirements and the Assistance Agreement. Deed restrictions, covenants running with the land, or other similar instruments may be used as the mechanism to impose a strategy. The Recipient shall report to the CDFI Fund the event of resale and/or recoupment and redeployment of the CMF Award, or an equivalent amount, in the manner described in the Assistance Agreement or other guidance issued by the CDFI Fund. (3) The affordability restrictions are allowed to terminate upon occurrence of any of the following termination events: foreclosure, transfer in lieu of foreclosure, or assignment of an FHA-insured mortgage to HUD. The termination of the affordability restrictions pursuant to any of the aforementioned terminating events will result in the Housing no longer being subject to a recoupment, replacement, and/or resale strategy as previously imposed by the Recipient. The Recipient may use purchase options, rights of first refusal or other preemptive rights to purchase the Housing before foreclosure to preserve affordability. The affordability restrictions shall be revived according to the original terms if, during the original Affordability Period, the owner of record before the termination event obtains an ownership interest in the Housing. (b) Rehabilitation not involving purchase. (1) The estimated value of the Single-family housing, after Rehabilitation, does not exceed the purchase price limits for the area, as used in the HUD FHA Section 203(b) Mortgage Insurance Program, or any other index designated by the CDFI Fund. The underlying mortgage(s) should be affordable for the Homebuyer; (2) The Single-family housing is owned by a qualifying Family as set forth in § 1807.400 and is the only principal residence of the Family at the time of Project Commitment and remains the principal residence of the Family throughout the Affordability Period as described in paragraph (b)(3) of this section; (3) Single-family housing under this paragraph (b) must meet the affordability requirements during the Affordability Period upon Project Completion or meet the recoupment, replacement, and/or resale provisions of paragraph (a)(5) of this section; and (4) Single-family housing under this paragraph (b) currently owned by a qualifying Family may be rehabilitated to convert a portion of the Housing into one to three permanent additional units, each with a separate means of ingress/egress, kitchen, sleeping area, bathing area, and bathroom facilities, independent of the primary dwelling. The additional units may be rented as Permanent Housing as long as the primary dwelling remains the principal residence of the Family. While the Affordability Period applies to the primary dwelling, it does not apply to the additional units discussed in this section. (c) Ownership interest. (d) New construction without Purchase. (e) Converting rental units to Homeownership units for existing tenants. § 1807.403 Economic Development Activities. A CMF Award used for Economic Development Activities must stabilize, sustain, or revitalize communities and neighborhoods to meet the requirements set forth herein. For each individual CMF Award round, the Recipient may use no more than 30 percent of its CMF Award for Economic Development Activities, if such use is approved in its applicable Assistance Agreement. (a) Eligible uses. (b) Minimum use Term. (c) Concerted strategy. (d) In Conjunction with Affordable Housing Activities. (1) Located in a Low-Income Area or Underserved Rural Area; (2) Undertaken in conjunction with any affordable housing that is subject to or authorized by local, State or Federal laws; and (3) Reasonably available, physically proximate, and benefit residents of such affordable housing. For a Metropolitan Area, the Economic Development Activities must be located within the same census tract or within one mile of such affordable housing. For a Non-Metropolitan Area, Economic Development Activities must be located within the same county, township, or village, or within 10 miles of such affordable housing. Subpart E—Leveraged Capital; Eligible Project Costs; Commitments; Project Completion § 1807.500 Leveraged Capital; Eligible Project Costs. (a) Eligible project costs. (b) Leveraged capital. (2) The Recipient must report to the CDFI Fund the amount of Leveraged Capital, with the following limitations: (i) No costs attributable to prohibited uses, as set forth in § 1807.302(a) and (b), may be reported as Leveraged Capital; (ii) All uses of Leveraged Capital to finance and/or support Affordable Housing Activities shall comply with §§ 1807.400, 1807.401 and 1807.402, and as further described in the Assistance Agreement; (iii) All uses of Leveraged Capital to finance and/or support Economic Development Activities shall comply with § 1807.403, and as further described in the Assistance Agreement. § 1807.501 Commitments. (a) The CMF Award must be Committed for Use by the Recipient to one or more Eligible Uses as provided in § 1807.301 within two years from the Effective Date of the CMF Award, as such date designated in the Recipient's Assistance Agreement. (b) The Recipient must achieve Project Commitment of the entire CMF Award within three years from the Effective Date of the CMF Award as designated in the Recipient's Assistance Agreement. (c) The Recipient must evidence a Project Commitment with a written, legally binding agreement to invest in a Project by providing the CMF Award proceeds to the qualifying Family, developer or project sponsor in which: (1) Construction on real estate can reasonably be expected to start within 12 months of the Project Commitment agreement date; or (2) Property title on real estate will be transferred within six months of the Project Commitment agreement date; or (3) Construction schedule on real estate ensures Project Completion within five years of a date specified in the Assistance Agreement; or (4) The Recipient has entered into a Secondary Market Mortgage Purchase agreement with a third-party lender to purchase the qualified mortgages and the subject mortgages would not otherwise have been originated by the third-party lender absent that agreement; or (5) A commitment for a qualified Homeownership Program has been made by the action of the Recipient's Board of Directors; or (6) The Recipient has entered into a Loan Guarantee agreement or has established a cash reserve, escrow, or accounting-based accrual reserve with a lender or investor for a Loan Loss Reserve. § 1807.502 CMF Award limits. An eligible Applicant and its Subsidiaries and Affiliates may not be awarded more than 15 percent of the aggregate funds available for the CMF Awards during any year. § 1807.503 Project Completion; Property standards. (a) Upon Project Completion, the Project must be placed into service by the date designated in the Assistance Agreement. Project Completion for Affordable Housing Activities and Economic Development Activities occurs, as determined by the CDFI Fund, when: (1) All necessary title transfer requirements and construction work have been performed; (2) The property standards of paragraph (b) of this section have been met; (3) The final drawdown of the CMF Award has been made to the project sponsor or developer; (4) For Preservation, the refinancing of the loan is closed and the underlying real estate is in compliance with all CMF requirements and, if applicable, Rehabilitation is completed and the requirements set forth in this paragraph (a) are achieved; (5) For qualified Secondary Market Mortgage Purchase, the loan purchase transaction is complete, all CMF Secondary Market Mortgage requirements are met, and the CMF Award is disbursed to the lender ( i.e., (6) For Loan Loss Reserves, the Loan Loss Reserve is established and the CMF Award is disbursed to an escrow, cash reserve, or obligated to an accounting-based accrual reserve to secure loans for Affordable Housing or Economic Development Activities that meet the requirements of subpart D of this part; (7) For Loan Loss Guarantees, the Loan Guarantee is executed guaranteeing loans for Affordable Housing or Economic Development Activities that meet the requirements of subpart D of this part. (b) By the Project Completion date, the Project must meet the requirements of this part, including the following property standards: (1) Code requirements. (2) Other requirements. (i) Accessibility. (ii) Disaster mitigation. e.g., (iii) Lead-based paint. (3) Rehabilitation standards. (i) For rental Housing, if the remaining useful life of one or more major systems is less than the Affordability Period, the Recipient must ensure that, at Project Completion, the developer or Project sponsor establishes a replacement reserve and that monthly payments are made to the reserve that are adequate to repair or replace the systems as needed. Major systems include: structural support; roofing; cladding and weatherproofing ( e.g., (ii) For Homeownership Single-family housing, the Recipient must ensure that, at Project Completion, the Housing is decent, safe, sanitary, and in good repair. The Recipient must ensure that timely corrective and remedial actions are taken to address identified life-threatening deficiencies. (4) Manufactured housing. Subpart F—Tracking Funds; Uniform Administrative Requirements; Nature of Funds § 1807.600 Tracking funds. The Recipient shall develop and maintain an internal tracking and reporting system that ensures that the CMF Award is used in accordance with this part and the Assistance Agreement. § 1807.601 Uniform Administrative Requirements. The Uniform Administrative Requirements apply to all CMF Awards. § 1807.602 Nature of funds. CMF Awards are Federal financial assistance with regard to the application of Federal civil rights laws. Subpart G—Notice of Funds Availability; Applications § 1807.700 Notice of funds availability. Each Applicant must submit a CMF Award Application in accordance with the applicable Notice of Funds Availability (NOFA) published in the Federal Register. §§ 1807.701-1807.799 [Reserved] Subpart H—Evaluation and Selection of Applications § 1807.800 Evaluation and selection—general. Each Applicant will be evaluated and selected, at the sole discretion of the CDFI Fund, to receive a CMF Award based on a review process that will include a paper or electronic Application, and may include an interview(s) and/or site visit(s), and that is intended to: (a) Ensure that Applicants are evaluated in a fair and consistent manner based on the criteria outlined in the NOFA; (b) Ensure that each Recipient can successfully meet its performance goals and achieve Affordable Housing Activity and Economic Development Activity impacts; (c) Ensure that Recipients represent a geographically diverse group of Applicants serving Metropolitan Areas and Rural Areas across the United States to address economic distress. Criteria of economic distress may include: (1) The percentage of Low-Income Families or the extent of poverty; (2) The rate of unemployment or underemployment; (3) The extent of disinvestment; (4) Economic Development Activities that target Extremely Low-Income, Very Low-Income, and Low-Income Families within the Recipient's Service Area; and (5) Any other criteria the CDFI Fund shall set forth in the applicable NOFA; and (d) Take into consideration other factors as set forth in the applicable NOFA. § 1807.801 Evaluation of Applications. (a) Eligibility and completeness. (b) Substantive review. (c) Other factors. (d) Consultation with appropriate regulatory agencies. (e) Recipient selection. Subpart I—Terms and Conditions of a CMF Award § 1807.900 Assistance agreement. (a) Each Applicant that is selected to receive a CMF Award must enter into an Assistance Agreement with the CDFI Fund. The Assistance Agreement will set forth certain required terms and conditions for the CMF Award that may include, but are not limited to, the following: (1) The amount of the CMF Award; (2) The approved Eligible Uses of the CMF Award; (3) The approved Service Area; (4) The time period by which the CMF Award proceeds must be Committed for Use; (5) The required documentation to evidence Project Completion; and (6) Performance goals that have been established by the CDFI Fund pursuant to this part, the NOFA, and the Recipient's Application. (b) The Assistance Agreement shall provide that, in the event of fraud, mismanagement, noncompliance with the Act or these regulations, or noncompliance with the terms and conditions of the Assistance Agreement, on the part of the Recipient, the CDFI Fund, in its discretion, may make a determination to: (1) Require changes in the performance goals set forth in the Assistance Agreement; (2) Revoke approval of the Recipient's Application; (3) Reduce or terminate the CMF Award; (4) Require repayment of any CMF Award that have been paid to the Recipient; (5) Bar the Recipient from applying for any assistance from the CDFI Fund; or (6) Take such other actions as the CDFI Fund deems appropriate or as set forth in the Assistance Agreement. (c) Prior to making a determination that the Recipient has failed to comply substantially with the Act or these regulations or an Assistance Agreement, the CDFI Fund shall provide the Recipient with reasonable notice and opportunity to cure any instances of noncompliance. § 1807.901 Payment of funds. CMF Awards provided pursuant to this part may be provided in a lump sum payment or in some other manner, as determined appropriate by the CDFI Fund. The CDFI Fund shall not provide any Payment under this part until a Recipient has satisfied all conditions set forth in the applicable NOFA and Assistance Agreement. § 1807.902 Data collection and reporting. (a) Data; general. (1) Disclose the manner in which the CMF Award is used, including providing documentation to demonstrate Project Completion; (2) Demonstrate compliance with the requirements of this part and the Assistance Agreement; and (3) Evaluate the impact of the CMF Award. (b) Beneficiary demographics data. (c) Access to records. (d) Retention of records. (e) Data collection and reporting Financial reporting. (ii) For-profit Recipients (excluding Insured CDFIs and State-Insured Credit Unions) must submit to the CDFI Fund financial statements audited in conformity with generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants by a time set forth in the applicable NOFA or Assistance Agreement. (iii) Regulated financial institutions (Insured Depository Institutions, Depository Institution Holding Companies, and Insured Credit Unions), including regulated nonprofit organizations, must submit to the CDFI Fund financial statements audited in conformity with generally accepted auditing standards as promulgated by the American Institute of Certified Public Accountants by a time set forth in the applicable NOFA or Assistance Agreement. (2) Annual report. (ii) The CDFI Fund will use the annual report to collect data to assess the Recipient's compliance with its performance goals and the impact of the CMF and the CDFI industry. (iii) The Recipient is responsible for the timely and complete submission of the annual report, even if all or a portion of the documents actually are completed by another entity. If such other entities are required to provide information for the annual report, or such other documentation that the CDFI Fund might require, the Recipient is responsible for ensuring that the information is submitted timely and complete. The CDFI Fund reserves the right to contact such other entities and require that additional information and documentation be provided. (iv) The CDFI Fund's review of the compliance of an Insured CDFI, a Depository Institution Holding Company or a State-Insured Credit Union with the terms and conditions of its Assistance Agreement may also include information from the Appropriate Federal Banking Agency or Appropriate State Agency, as the case may be. § 1807.903 Compliance with government requirements. In carrying out its responsibilities pursuant to an Assistance Agreement, the Recipient shall comply with all applicable Federal, State, and local laws, regulations, and ordinances, Uniform Administrative Requirements, and Executive Orders. Furthermore, Recipients must comply with the CDFI Fund's environmental quality regulations (12 CFR part 1815), as well as all other Federal environmental requirements applicable to Federal awards. § 1807.904 Lobbying restrictions. No CMF Award may be expended by a Recipient to pay any person to influence or attempt to influence any agency, elected official, officer or employee of a State or local government in connection with the making, award, extension, continuation, renewal, amendment, or modification of any State or local government contract, grant, loan or cooperative agreement as such terms are defined in 31 U.S.C. 1352. § 1807.905 Criminal provisions. The criminal provisions of 18 U.S.C. 657 regarding embezzlement or misappropriation of funds are applicable to all Recipients and insiders. § 1807.906 CDFI Fund deemed not to control. The CDFI Fund shall not be deemed to control a Recipient by reason of any CMF Award provided under the Act for the purpose of any applicable law. § 1807.907 Limitation on liability. The liability of the CDFI Fund and the United States Government arising out of any CMF Award shall be limited to the amount of the CMF Award. The CDFI Fund shall be exempt from any assessments and other liabilities that may be imposed on controlling or principal shareholders by any Federal law or the law of any State. Nothing in this section shall affect the application of any Federal tax law. § 1807.908 Fraud, waste and abuse. Any person who becomes aware of the existence or apparent existence of fraud, waste or abuse of a CMF Award should report such incidences to the Office of Inspector General of the U.S. Department of the Treasury.