The agencies announced the withdrawal on April 15, reversing an Oct. 12, 2023, joint statement that had warned creditor policies related to immigration or citizenship status could run afoul of the Equal Credit Opportunity Act and Regulation B's prohibition on discrimination based on race and national origin.
The CFPB and DOJ said they withdrew the statement to avoid conflict with ECOA and Regulation B, which the agencies said permit creditors to consider "pertinent elements of creditworthiness and information necessary to protect creditor rights and remedies, including immigration or citizenship status."
Acting CFPB Director Russell Vought said the withdrawal corrects "the last administration's attempt to ignore these well-accepted and common-sense principles of our nation's fair lending laws." Vought said ECOA regulations have "for decades" permitted lenders to consider lawful residence status and other information necessary to protect repayment rights.
Assistant Attorney General Harmeet K. Dhillon of the Justice Department's Civil Rights Division said 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." Dhillon characterized the action as "restoring alignment with established federal civil rights law rather than continuing the prior administration's ideologically-driven departures."
The agencies said the original guidance could confuse lenders about their ability to legitimately consider immigration status when necessary to avoid financial risks and comply with other laws. The withdrawal also addresses what the agencies called a "misimpression" that the 2023 statement interpreted 42 U.S.C. Section 1981 to create new liability under the statute beyond what courts have already recognized.
The agencies said withdrawal is appropriate to avoid unnecessary burdens from new or increased compliance efforts that may have resulted from the original guidance.