CFPB and DOJ Withdraw 2023 Guidance on Immigration Status in Lending Decisions

The Consumer Financial Protection Bureau and the Department of Justice announced they have withdrawn a joint statement that cautioned lenders that considering borrowers' immigration or citizenship status could in certain circumstances violate fair lending laws. The agencies said they withdrew the October 12, 2023 statement to avoid conflict with the express language of the Equal Credit Opportunity Act and its implementing regulation, Regulation B.

The original joint statement had warned that creditor policies related to an applicant's immigration or citizenship status could "in certain circumstances, run afoul of ECOA's and Regulation B's prohibition of discrimination on the basis of protected classes, including race and national origin."

The agencies said ECOA and Regulation B permit creditors to consider "pertinent elements of credit-worthiness and information necessary to protect creditor rights and remedies, including a borrower's immigration or citizenship status." They said withdrawal was appropriate to clarify that lenders may legitimately consider immigration status when necessary to avoid financial risks and comply with other laws.

"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," said Acting Director Russell Vought. "We are correcting the last administration's attempt to ignore these well-accepted and common-sense principles of our nation's fair lending laws."

Assistant Attorney General Harmeet K. Dhillon said the administration is "restoring alignment with established federal civil rights law rather than continuing the prior administration's ideologically-driven departures."

The agencies also said the withdrawal addresses any misimpression that the joint statement interprets 42 U.S.C. § 1981 to create liability beyond what courts have already recognized under the statute. They said withdrawal would avoid "unnecessary burdens from new or increased compliance efforts."