US regulators have withdrawn joint guidance on how lenders may consider immigration status in credit decisions, a change that could affect immigrants’ ability to obtain loans.
The Consumer Financial Protection Bureau (CFPB) and the Department of Justice (DoJ) have formally withdrawn a 2023 joint statement that addressed how a creditor’s consideration of a borrower’s immigration status intersects with the Equal Credit Opportunity Act (ECOA).
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The document, issued under former President Joe Biden, had warned that lender policies linked to citizenship or immigration status could, in some circumstances, breach ECOA and Regulation B, which bar discrimination on protected grounds such as race and national origin.
Although the underlying law already bars lenders from discriminatory practices, the guidance sought to expressly clarify and enforce it to avoid discrimination.
Under ECOA and Regulation B, creditors may consider relevant factors linked to creditworthiness and to the protection of creditor rights and remedies, which can include a borrower’s immigration or citizenship status.
Assistant Attorney General Harmeet K. Dhillon of the Justice Department’s Civil Rights Division said: “This administration is restoring alignment with established federal civil rights law rather than continuing the prior administration’s ideologically-driven departures.”
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By GlobalDataThe agencies said they believe withdrawal is appropriate to avoid any confusion that lenders may legitimately consider immigration status under several circumstances, including when necessary to avoid financial risks and to comply with other laws.
In a statement on the withdrawal, the agencies said they believe withdrawal is “appropriate to avoid any unnecessary burdens” from new or increased compliance efforts.
Russell Vought, the acting director at the CFPB, said: “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.
“We are correcting the last administration’s attempt to ignore these well-accepted and common-sense principles of our nation’s fair lending laws.”
