Cfpb, Doj Withdraw 2023 Warning On Immigration Status In Credit Decisions

Federal agencies are walking back a 2023 warning that credit policies tied to an applicant’s immigration or citizenship status could conflict with the Equal Credit Opportunity Act (ECOA) and Regulation B, saying the guidance created confusion among lenders.

In October 2023, the Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DOJ) issued a joint statement cautioning lenders that their policies could, in some circumstances, result in discrimination based on protected classes, including race and national origin.

In an announcement on Monday, the same agencies said they are shifting toward a narrower, statute-based interpretation of ECOA, easing concerns that merely considering immigration status could trigger fair lending violations.

“For decades, ECOA regulations have permitted lenders to consider a borrower’s lawful residence status and other information necessary to protect their rights and remedies with respect to repayment,” CFPB acting director Russell Vought said in a statement.

According to the agencies, ECOA and Regulation B permit creditors to consider immigration or citizenship status as “pertinent elements of creditworthiness and information necessary to protect creditor rights and remedies.” Lenders may legitimately consider immigration status in several circumstances, including to manage financial risk and comply with other legal requirements.

The agencies also said the withdrawal was intended to address any misimpression that the joint statement interpreted 42 U.S.C. § 1981 as creating liability beyond what courts have already recognized. Ultimately, they said, the move is aimed at avoiding unnecessary compliance burdens resulting from new or expanded interpretations.

“The federal government is committed to avoiding statements that could confuse the law or imply compliance standards for civil rights laws that lack any statutory or regulatory basis,” Harmeet K. Dhillon, assistant attorney general for the DOJ’s Civil Rights Division, said in a statement.