WASHINGTON (11/21/08)—As it adopted a plan to broaden its rule on low-income designation, the National Credit Union Administration (NCUA) Thursday approved changes to its original plan that are intended to provide greater clarity to the process. The low-income designation rule is important in determining whether a credit union qualifies for assistance to help low-income members. NCUA board member Gigi Hyland said prior to the NCUA’s vote on the final that she hoped the agency’s action would serve to encourage credit unions to explore low-income designation by making the rules easier to understand. With low-income designation, a credit union can qualify for subsidies from the NCUA’s Community Development Revolving Loan Fund. Under the new designation rule, median family income (MFI) will be used instead of median household income (MHI) to define whether a credit union’s members may be considered low-income. To be a low-income credit union, a majority of members must meet the income standard. The switch to MFI is meant to eliminate confusion associated with the need to adjust MHI in metropolitan areas with higher costs of living. Also, the change betters aligns NCUA low-income designation criteria with its criteria for adding an underserved areas to a federal credit union’s field of membership and certification as a Community Development Financial Institution, according the agency. Under the final rule, low-income members are those who earn 80% or less of their metropolitan area MFI. Credit unions are not required to apply for low-income status. Based on information culled during a routine examination, an NCUA regional director will notify the credit union that it qualifies. The credit union then has 30 days to accept the designation. Use the resource link below to access the complete final regulation.