Form 4 Annual Assessment Report

CDFI Bond Guarantee Program
Phone: (202) 653.0421 Email:[email protected]

Annual Assessment: Procedures and Criteria Overview
Each Qualified Issuer and Eligible CDFI participating in the CDFI Bond Guarantee Program shall present
annually a report or series of reports examining the participant’s performance on the following criteria:
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Financial Strength
Portfolio Management and Servicing Capability
Management and Staffing
Systems and Information Technology
Internal Controls
Program Administration (Qualified Issuers Only)
Impact Methodology (Eligible CDFIs Only)

The Annual Assessment Report must be submitted as soon as available and in any event within one
hundred eighty (180) days after the end of each Fiscal Year and shall be substantially performed by a
vendor(s) with demonstrated experience in completing similar assessments. Pursuant to the provisions of
12 CFR 1808.619(c)(2), Qualified Issuers and Eligible CDFIs must submit such financial and activity
reports, records, statements, and documents at such times, in such forms, and accompanied by such
reporting data, as required by the CDFI Fund to ensure compliance with the requirements of Bond
Guarantee Program Regulations.
For Eligible CDFIs only, and pursuant to the Bond Loan Agreement information reporting requirements,
Eligible CDFIs must notify the CDFI Fund of their vendor(s) of choice at least thirty (30) days prior to
such assessment, provided with a certification that the vendor(s) has/have demonstrated experience in
similar assessments, and which form of assessment has been approved by the Qualified Issuer. A thirty
(30) day notice is not required for assessments of the Qualified Issuer.
Although the CDFI Fund will not approve proposed vendors, participants must utilize a vendor that
demonstrates it possesses the qualifications and abilities to fulfill the aspects of the assessment for which
it is responsible. For each of the six (6) components identified above, the Qualified Issuer or Eligible
CDFI should describe the vendor’s qualifications, experience, and suitability as it relates to performing
each function. For each individual component, the vendor may be a third-party entity, or the component
may be performed by the Qualified Issuer if it demonstrates the appropriate qualifications, skills, abilities,
and experience.

PAPERWORK REDUCTION ACT BURDEN STATEMENT
OMB Control Number 1559-0044
According to the Paperwork Reduction Act, as amended, no persons are required to respond to a collection of
information unless it displays a valid Office of Management and Budget (OMB) Approval Number. This form's
Approval Number is 1559-0044. Public reporting burden for this collection of information is estimated to average
2.0 hours per response, including time for reviewing instructions, searching existing data sources, gathering and
maintaining the data needed, and completing and reviewing the collection of information. Send comments
regarding the burden estimate or any other aspect of this collection of information, including suggestions for
reducing this burden, to the Community Development Financial Institutions Fund, 1500 Pennsylvania, NW,
Washington, D.C. 20220.   

CDFI Bond Guarantee Program
Phone: (202) 653.0421 Email:[email protected]

Report Guidelines
The Annual Assessment Report shall contain the following:
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Executive Summary (3–5 pages) describing applicable vendor(s) qualifications and prior
experience in conducting similar assessments;
A Summary of Findings (3-5 pages) and any recommendations for improvement;
Responses to the checklist questions contained at the end of this document; and
Report or set of reports examining the performance on the six (6) criteria identified above.

Report Quality
Please be advised that vendor selection is critical for both Qualified Issuers and Eligible CDFIs. If the
vendor does not demonstrate the appropriate qualifications, skills, abilities, and experience to perform the
role(s) for which it is responsible, the CDFI Fund may take additional action including, but not limited to:
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Asking additional or clarifying questions associated with the six (6) required criteria;
Initiating and performing enhanced monitoring activities; and
Requesting additional materials to evaluate the Qualified Issuer’s or Eligible CDFI’s compliance
with the Bond Guarantee Program Requirements.

Further, if the Annual Assessment reports fail to adequately evaluate the participant’s performance on the
six (6) criteria detailed above, the CDFI Fund may request that the assessment be performed by an
alternative vendor with the appropriate qualifications.

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CDFI Bond Guarantee Program
Phone: (202) 653.0421 Email:[email protected]

Evaluation Criteria
Financial Strength (Qualified Issuers and Eligible CDFIs)
An evaluation of the participant’s financial strength and creditworthiness should include, but is not
limited to, an assessment of:
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The participant’s financial capacity to originate, underwrite, close, and disburse loans in a prudent
manner;
The participant’s dependence on external funding sources and the participant’s ability to access
these funding sources over the long-term;
Evidence that net assets, equity, or net capital are able to withstand adverse conditions;
The Eligible CDFIs ability to pay the Bond Loan (Eligible CDFIs only); and
Any foreseeable counterparty issues or credit concerns that may impact the participant’s financial
stability.

Portfolio Management and Servicing Capability (Qualified Issuers and Eligible CDFIs)
An evaluation of the participant’s portfolio management and servicing capability should include, but is
not limited to, an assessment of:
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The participant’s tracking of loan payments from Eligible CDFIs or Secondary Borrowers, as
applicable;
The participant’s demonstrated ability to work with the Eligible CDFI, Qualified Issuer, Escrow
Agent, Master Servicer/Trustee, and/or Bond Guarantee Program staff, as applicable;
The participant’s management and technological capacity to initiate collection activities on
delinquent Bond Loans or Secondary Loans, as applicable;
The participant’s underwriting and approval of Secondary Loan commitments based on
Secondary Loan Requirements (Eligible CDFIs Only); and
Secondary Loan Certification forms (Eligible CDFIs only).

Management and Staffing (Qualified Issuers and Eligible CDFIs)
An evaluation of the participant’s plan for managing and staffing its operations to adequately fulfill its
role in the Bond Guarantee Program should include, but is not limited to, an assessment of:
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Organizational stability, including staff retention;
Management’s capacity to carry out its role in the Bond Guarantee Program as evidenced in job
descriptions and other (non-personally identifiable) data on Senior Management; and
Any critical vacancies in the participant’s management hierarchy and whether or not they are
addressed in the participant’s staffing plan.

Systems and Information Technology (Qualified Issuers and Eligible CDFIs)
An evaluation of the sophistication of the participant’s systems and information technology and its ability
to effectively manage the complexity of a Bond Issue under the Bond Guarantee Program should include,
but is not limited to, an assessment of:

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CDFI Bond Guarantee Program
Phone: (202) 653.0421 Email:[email protected]

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The capacity of office infrastructure and related technology to carry out the Bond Guarantee
Program activities; and
Backup and disaster recovery systems to maintain uninterrupted business operations.

Internal Controls (Qualified Issuers and Eligible CDFIs)
Participants should engage a reputable and regionally or nationally recognized auditing firm to complete
an internal controls audit. However, it is permissible to have parts of the internal controls section of the
Annual Assessment Report completed by the internal controls or compliance staff of the Qualified Issuer.
The organization selected to complete the internal controls assessment must have prior and demonstrated
experience in performing similar work. The internal controls section of the Annual Assessment Report
shall include results of tests of all applicable internal controls. The review should include, but is not
limited to, an assessment of:
 Compliance with policies and procedures in reviewing and approving loans;
 Loan Servicing;
 Compliance Monitoring; and
 Portfolio Management Activities.
Program Administration (Qualified Issuers only)
An evaluation of the Qualified Issuer’s expertise and capacity in fulfilling its Program Administrator role
should include, but is not limited to, an assessment of:
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The Qualified Issuer’s review and approval of Secondary Loan commitments based on Secondary
Loan Requirements;
Policies and procedures for monitoring compliance of Bond and Secondary Loans;
Policies and procedures for the preparation and submission of reports as required by the Interim
Rule;
The Qualified Issuer’s Secondary Loans Certification form review process and a review of
supporting documentation;
Collateral management process;
The process for reviewing Requisitions and compiling Advance Request Forms; and
The Qualified Issuer’s tracking of payments and release of funds.

Impact Methodology (Eligible CDFIs only)
An evaluation of the Eligible CDFI’s impact methodology should include, but is not limited to:
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An assessment of the evaluation design and data sources used to draw conclusions; and
A comparison of outcomes defined by program participants before and after bond guarantee
program intervention.

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CDFI Bond Guarantee Program
Phone: (202) 653.0421 Email:[email protected]

U.S. Department of the Treasury: CDFI Fund
CDFI Bond Guarantee Program
Annual Checklist
Evaluation Criteria1

Yes

No

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Has a Statement on Standards for Attestation Engagements No. 16 been performed on your
organization during the last 12 months? (If yes, please provide a copy.)

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Has a Single Audit (OMB A-133 audit) been performed on your organization during the last
12 months? (If yes, please provide a copy.)

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Is the organization on target in its lending and investment activities in accordance with its
most recent Capital Distribution Plan?
Per 12 CFR 1808.302(f), have 100 percent of the principal amount of Guaranteed Bonds
currently disbursed and outstanding been used to make loans to Eligible CDFIs for Eligible
Purposes?
Is the organization current on all applicable licenses and Errors and Omissions Insurance
certificates?
Has the organization experienced any changes in senior management or key personnel
associated with the CDFI Bond Guarantee Program? (If yes, please provide an updated
copy of the organization chart.)
Has the organization identified any actual or perceived conflicts of interest that could arise
from performing its designated role in the CDFI Bond Guarantee Program?
Have there been any significant modifications to the following policies/procedures since the
most recent quarterly review: credit/loan underwriting, closing requirements, ethics/conflict
of interest, portfolio monitoring/asset management, and internal controls? (If yes, please
provide an updated copy of the applicable policies and procedures.)
Has the organization experienced a Material Event, as defined in the Bond Loan
Agreement, since the most recent quarterly report?
Has the organization experienced an Event of Default, as defined in the Bond Loan
Agreement, or due and unsatisfied liability with respect to any obligations to the Guarantor,
the Bond Purchaser, the Internal Revenue Service, or any other instrumentality of the U.S.
government since the most recent quarterly report?

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All capitalized terms in this checklist have definitions ascribed to in the Bond Loan Agreement and the Agreement
to Guarantee.
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