CFPB and the DOJ withdraw joint statement on fair lending

NEWS:  On January 12th, the Consumer Financial Protection Bureau (CFPB)  announced the withdrawal of an October 2023 joint statement which warned that a creditor’s policies related to an applicant’s immigration or citizenship status could, in certain circumstances, run afoul of the Equal Credit Opportunity Act’s (ECOA) anti-discrimination requirements.  We cautioned credit unions about this new guidance in this Compliance Courier.

The ECOA prohibits discrimination by a creditor in any aspect of a credit transaction, on the basis of race, color, religion, national origin, sex, marital status, age, an applicant’s receipt of public assistance, or the good faith exercise of an applicant’s rights under the Consumer Credit Protection Act.  The CFPB has determined that the joint statement provides a false impression that the ECOA imposes limitations on consideration of an applicant’s immigration and/or citizenship status.  This withdrawal is intended to correct any such misimpression.  In fact, Regulation B expressly permits a creditor to inquire about and take into consideration an applicant’s permanent residency and immigration status, so long as it is not used to discriminate on a protected basis. 

Nothing in ECOA or Regulation B prohibits the consideration of an applicant’s immigration or citizen status. To the contrary, Regulation B permits the consideration of “any information obtained, so long as the information is not used to discriminate against an applicant on a prohibited basis.” 12 CFR 1002.6(a). More specifically, it states that “[a] creditor may take the applicant’s immigration status into account,” 12 CFR part 1002, supp I. ¶ 2(z)-2, and “may consider the applicant’s immigration status or status as a permanent resident of the United States, and any additional information that may be necessary to ascertain the creditor’s rights and remedies regarding repayment.” 12 CFR 1002.6(b)(7).

The CFPB stated that the withdrawal was consistent with its policy of issuing guidance only when necessary and where doing so would reduce compliance burdens.